The €50 limit
You can deduct gifts to customers, clients and other business partners if all gifts to the same person together cost no more than €50 in the year (section 4 (5) sentence 1 no. 1 EStG). The limit has applied since 1 January 2024; before that it was €35.
The €50 is an exemption limit, not an allowance. Stay at or below it and everything counts. Go even one cent above it and no gift to that person in that year is deductible, the earlier ones included.
An example: in June you give a customer a professional book for €40 net when the project wraps up. In December a bottle of wine for €12 net follows. Together that is €52, so neither gift is deductible any more.
Net or gross
Which amount counts depends on whether you can deduct input tax:
| Your situation | What counts toward €50 |
|---|---|
| Regular VAT, with input tax deduction | net amount |
| Small business rule, no input tax deduction | gross amount |
Actual packaging and shipping costs are not included. When the small business rule applies to you is explained in the guide on the small business rule.
What happens to the input tax above the limit
If a gift is not deductible under section 4 (5) sentence 1 no. 1 EStG, you may not deduct the input tax on it either (section 15 (1a) UStG). Business meals are different: there the input tax stays fully deductible, see the guide on business meals.
If only a later gift takes you over the limit, you may already have deducted the input tax on the first one. You then have to correct that deduction. When and how is best settled with your tax advisor.
What counts as a gift
A gift is something given without anything in return. Books, wine, flowers or a gift card are typical.
- Small promotional items such as pens or calendars with your logo that you hand out widely may be recorded collectively without naming each recipient.
- Items the recipient can only use for business are not subject to the limit.
- A meal together is not a gift but business entertainment. The 70% rule applies there instead of the €50 limit.
- Gifts to your own employees follow other rules from payroll tax law.
Separate records
You record gifts individually and separately from your other business expenses (section 4 (7) EStG). The recipient’s name has to be clear from the entry or the receipt. Without separate records the gifts are not deductible, even below €50. This also applies to the EÜR profit statement.
The flat-rate tax under section 37b EStG
For the recipient your gift may be taxable, for example as business income. So that your customer doesn’t have to deal with it, you can take over their tax. Under section 37b EStG you then pay a flat 30% on the cost of the gift including VAT, plus solidarity surcharge and church tax where it applies.
- The flat-rate tax is optional, but you decide for a whole year for all gifts to business partners at once.
- You tell the recipient that you have paid the tax (section 37b (3) EStG).
- The tax authorities exclude promotional items up to €10 each from the flat-rate tax (BMF letter of 19 May 2015).
- The flat-rate tax is only a business expense if the gift itself is deductible.
This guide explains the rules in general and is not tax advice.
Common questions
Does the limit apply per company or per person?
It applies per recipient, meaning the person who receives the gift. If you give gifts to two contacts at the same company, each person counts separately. So note down both person and company.
Do shipping and wrapping count?
Actual packaging and shipping costs do not count toward the limit. You still deduct them as a business expense.
What happens if I go over the limit?
Then none of the gifts to that person in that year is deductible, and the input tax on them is lost as well. The gifts stay in your records, just as non-deductible expenses.
Is a gift card a gift too?
Yes. A gift card for a bookstore or a restaurant counts toward the €50 limit at its value. If you go out to eat with the customer yourself, it is business entertainment instead.