7th North German Business Conference
Caution, compliance
Gifts to business partners may cause hassle with the tax authoritiesHamburg, 31.05.2011 – The North German Business Conference, which is being held today in Hamburg, showcases important expertise relating to business processes, especially for SMEs. Special attention should be paid to gifts, invitations and benefits for third parties. Caution should be recommended from a tax perspective, explain Barbara Degen and Susanne Weber, tax experts at WTS.
In most SME businesses, compliance rules provide appropriate and effective means to ensure that companies and employees are safeguarded from unlawful actions. Apart from possible consequences relating to criminal law and employment law, gifts, invitations and benefits for third parties invariably have tax implications.
"Tax problems may arise for both sides even in the case of small benefits to business partners. As the person making the gift or receiving it, it is essential to establish whether it is a taxable gift and which of the parties takes responsibility for the taxes", explains Barbara Degen, tax advisor at the WTS Group Aktiengesellschaft Steuerberatungsgesellschaft in Hamburg.
Based on the flat-rate taxation of benefits-in-kind that was introduced in 2007, the person making the gift may provide tax relief to the recipient by paying the income tax at the flat rate of 30 %. "Anyone accepting gifts should therefore know exactly what the tax legislation stipulates", comments Susanne Weber, tax advisor and income expert at the WTS Group Aktiengesellschaft Steuerberatungsgesellschaft. "Someone making a gift should also address this issue in order to avoid inconvenience for the recipient."
