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The biggest tax trap at a company outing to Oktoberfest is the guest list. Whether an event is tax-advantaged depends on who is invited. Since this year, stricter rules apply to exclusive events with executives. When the boss provides for his staff, a taxable salary arises quickly, known as the "cash benefit." This means that on the invitation, income tax is due as with wages.

However, the government knows that company parties strengthen team spirit, and therefore encourages these gatherings with a tax benefit. Twice a year, employees can be invited if the improvement of the business climate is the focus. Up to 110 euros gross per person is tax-free for this occasion per event. Stefan Heine, tax lawyer and CEO of the tax software company Smartsteuer, explains that the money can be spent on catering, venue rental, or even the Ferris wheel ride.

If someone declines at the last minute, the company should plan for the actual attendees, not just the invited ones. The 110 euros may also include travel costs. If the party is held outside the workplace, the costs can be deducted from the 110 euros only if the company organizes the travel or if there is a hotel quota. Individually arranged travel and accommodation must be paid separately.

If the amount exceeds this, the employee has to pay income tax on their own party. The employer usually deducts 25% income tax from the amount, making the employee unaware of the costs. The tax benefit can only be used if the event is open to all employees. Exclusive events where executives stay apart no longer qualify for the tax benefit.

This was established in the 2026 annual tax law, despite a previous decision by the Federal Finance Court (case VI R 5/22). According to the lawmaker, a tax benefit granted to exclusive executive gatherings contradicts the general principle of equality. In such cases, the entire cash benefit is taxable. Employers often deduct 30% income tax for closed events, higher than the 25% standard rate for employees from different tax brackets. This applies even if customers are present, depending on the exact nature of the gathering.