Flat-rate income tax for company events

May 29, 2024

Good news for the executive floor: According to a ruling by the BFH (27.03.2024, VI R 5/22), a flat-rate wage tax allowance for company events is also possible if the company event is not open to all company employees. In the case in question, the lump sum was claimed for a Christmas party for the management board and management circle.

The Cologne tax court did not want to allow the lump sum in this case, as all company employees would have been significantly below the presumed collectively agreed income tax rate due to their position with the lump sum tax rate of 25%. Only if all employees were involved could a flat-rate taxation of 25% result in a reasonable average.

The BFH did not follow the reasoning of the Cologne tax court. This consideration was not reflected in the explanatory memorandum to the law, which is why the flat-rate taxation is also to be applied to company events at management level.