Benefits in kind and company events in Germany: A payroll guide for employers

Benefits in kind and company events are often planned as employee-experience measures. German payroll does not treat them as one category. The appropriate treatment depends on what is actually granted, when and to whom, how it is valued and which legal requirements are met. A clear approval flow prevents a last-minute event invoice or benefit list becoming an unresolved payroll item.

Cash and a benefit in kind follow different rules

German income-tax law does not turn a cash payment into a benefit in kind merely because the employer designates it for a specific purpose. Section 8 EStG includes earmarked cash payments, subsequent reimbursements, cash substitutes and benefits denominated in money among cash income.

Vouchers and payment cards may be treated differently where they entitle the holder exclusively to obtain goods or services and meet the statutory criteria. Employers should review the product design, redemption route and supporting terms before launch. A card or app label alone is not a payroll classification.

The EUR 50 amount is a monthly threshold, not a partial allowance

Benefits in kind valued under section 8(2) EStG are disregarded where the remaining advantage after any employee payment does not exceed EUR 50 in the calendar month. This is a threshold, not an allowance. The assessment therefore needs to look at the relevant benefits granted to the individual in that month rather than treating each purchase separately.

An auditable monthly record should identify the employee, benefit, valuation, employee contribution and approval. That gives HR and payroll a timely basis for deciding whether the intended treatment is available or whether a payroll item has arisen.

“Additional to salary” must reflect the real arrangement

For the vouchers and payment cards addressed in section 8(2) sentence 11 EStG, the benefit must be granted in addition to salary already owed. Section 8(4) sets conditions including that salary is not offset or reduced in favour of the benefit, that the benefit does not replace an already agreed future salary increase, and that salary does not rise if the benefit ends.

Replacing existing remuneration with a new benefit should therefore be reviewed before implementation. HR records the agreed arrangement; payroll processes the confirmed benefit type and valuation, rather than inferring the arrangement from a monthly file.

Use the official 2026 meal values in the right setting

For food provided as a benefit in kind, the 2026 Social Security Remuneration Regulation sets a monthly value of EUR 345: EUR 71 for breakfast and EUR 137 each for lunch and dinner. One thirtieth applies for shorter periods, producing EUR 2.37 for breakfast and EUR 4.57 for lunch or dinner per day.

Those values are not a universal shortcut for every form of hospitality. Section 8 EStG contains specific conditions for meals provided during qualifying business travel, including rules on valuation and the price of the meal. The occasion, meal, recipient and any employee contribution should be clear before the payroll run.

A Christmas party can be a company event

Section 19 EStG covers benefits provided to employees and their accompanying persons at events with a social character held at company level. A Christmas party can qualify, but its name is not decisive. The actual occasion, group invited and benefits provided must be assessed.

The EUR 110 amount applies per company event and participating employee where participation is open to all members of the business or a business unit. The treatment is available for up to two company events in a year. Planning and invitations should therefore preserve the selected event and the open eligibility group.

Capture VAT, accompanying persons and actual attendance

Section 19 EStG treats all employer expenditure, including VAT, as relevant event benefits, whether directly attributable to an individual or allocated as a share of the event framework. The valuation is based on the proportion of those costs attributable to the employee and that employee’s accompanying persons.

A robust allocation needs complete VAT-inclusive invoices, a cost schedule and an actual attendance record. An accompanying person is assigned to the relevant employee. An invitation list is not a substitute for evidence of the people who actually attended.

Decide the treatment of any excess before payroll

If the conditions are not met or the amount allocated to an employee exceeds the applicable framework, taxable employment income may arise. Payroll should receive the approved valuation, chosen tax treatment and supporting records—not a generic event amount.

Where the conditions of section 40(2) EStG are satisfied, an employer may apply a 25% flat-rate wage tax to employment income arising from a company event if participation is open to all employees of the business or a business unit. The employer should make and document that decision before the payroll cut-off.

Hand over a complete data set to HR and payroll

For benefits in kind, payroll needs at least the employee, benefit type, grant month, value, employee contribution, additional-to-salary assessment where relevant and approval. For a company event, it also needs the occasion, eligibility group, names and number of actual attendees, associated accompanying persons, VAT-inclusive invoices, total cost and the approved tax treatment.

Within the agreed scope, Northwind Payroll runs the complete German payroll process including the payroll run and statutory reporting. The employer remains responsible for the benefit policy, event decision and approval; Northwind processes the confirmed data through a transparent managed-payroll workflow.

Employer checklist

This checklist supports an operational process; it is not individual tax or employment-law advice.

Classify the proposed item as cash or a benefit in kind before committing to it
Review voucher and payment-card redemption conditions against the statutory requirements
Aggregate relevant benefits in kind by employee and calendar month
Record employee contributions and the additional-to-salary assessment where relevant
Capture meals with the correct occasion and current official value
Document the open eligibility group and chosen company events
Retain VAT-inclusive invoices, actual attendance and accompanying-person allocations
Decide the treatment of any excess and a possible flat-rate tax before payroll closes
Transfer only complete, approved data into HR and payroll

Official sources

The regulatory references in this article were reviewed against these official sources: