What you should know about gift-giving in the German workplace

From football game tickets to a bottle of wine, giving and receiving gifts especially around Christmas time is common in business relationships. But do so with caution as there can be consequences that come with it.

What you should know about gift-giving in the German workplace
An employee handing out presents to his colleagues. Photo: Deposit Photos.

Nowadays it’s not just bankers, politicians or executives that have to be particularly careful when receiving gifts, but also everyday employees.

According to the German Bar Association (DAV), the legal maximum value of a gift is not specified in the German criminal code. So how is one to know whether to accept a present or decline the gesture in fear of corruption or being accused of accepting bribes?

Ask when in doubt

Companies decide for themselves the extent to which employees are allowed to accept gifts. This can range from an absolute ban on gifts to a very generous reception of them.

Allianz insurance group, for instance, states in its corporate code of conduct that an approximate upper limit of a gift value is a range of between €20 and €40.

“In the German stock index and in other large companies there are so-called compliance regulations with regards to gift giving and receiving,” André Kasten, a lawyer specializing in employment law in Berlin, told Spiegel Online.

For Nathalie Oberthür, a labour law lawyer based in Cologne, employers must set a framework. “If the employee does not know this framework, he or she must ask company superiors,” she told the DAV.

Generally speaking, gifts at a maximum value of €10 or €15 are regarded as pure courtesy, Oberthür added. But this can also be problematic, especially in areas of work where corruption is more likely to take place, such as in purchasing.

“Gifts from certain customers could lead to conflicts of interest for a buyer in a company,” Oberthür said.

Those who are doubtful with regards to declining or accepting presents should not only inquire with their superiors, write DAV on their website. These employees should also ask themselves whether accepting the gift changes the business relationship.

Photo: Deposit Photos.

What’s the worst that can happen?

“Giving gifts in return for an official act may constitute a criminal offence,” says Oberthür. The line between courtesy and bribery is narrow, especially with regard to gifts involving entertainment such as concert tickets, the lawyer added.

The lawyer furthermore states: “Breach of the guidelines can lead to a warning and in serious cases to dismissal.”

“If an employee is proven to be corrupt or even suspected of being corrupt, he or she may be dismissed without notice.”

A classic situation in the workplace, Oberthür explains, is accepting expensive tickets for sporting events such as football matches. “This usually don't cost the gift givers anything if they already have season tickets,” the lawyer says, adding that it could still look bad though as employees may not be able to make impartial decisions afterward.

Where can I find the rules that apply to me?

Compliance rules can be found in places like one’s employment contract or on the company’s intranet site. But it is as much the employee’s responsibility as it is the employer’s responsibility to be aware of the rules, says Kasten.

Employees should find out for themselves about current gift-giving practices in their company at the beginning of an employment relationship, or at the latest with the first gift from a business customer, states the DAV.

Since the Siemens corruption affair surfaced in 2006, in which superiors in the international manufacturing company were accused of bribery, most companies have now clearly structured and formulated their internal compliance guidelines, added the DAV.

Strict regulations for public officials

Public officials such as judges, civil servants, notaries and employees working in public administration are not allowed to accept any gifts at all – this is regulated by the criminal code in Germany.

In spite of these clear rules, legal disputes about what is allowed as a gift and what is not come up time and time again.

Last month, police in Hamburg conducted raids due to 100 free tickets state officials allegedly received for a Rolling Stones concert in the harbour city.

In spring last year, a teacher in Berlin had to pay a fine of €4,000 for accepting an expensive gift – a sculpture worth about €200 – from one of her high school students.

What about gifts from my boss?

In general, gifts from one’s employer can be accepted up to a monthly value of €44, and gifts for personal occasions such as weddings the acceptable limit is €60, says Oberthür.

The lawyer warns though that accepting presents from one’s boss could lead to complications, particularly in terms of taxes.

But colleagues giving presents to other colleagues is less problematic as this is usually classified as a private and not an official present.

Do I have to declare the gifts on my taxes?

“If the tax gift limit of €35 has not been exceeded, the gift to an employee at another company is not subject to taxation,” tax consultant Wolfgang Wawro told Spiegel Online, explaining that this type of gift is “person-oriented” and therefore cannot be considered a gift to the company. But higher amounts must be included in one’s tax return, he warns.

Those who work on a freelance basis have it easier in that they can accept gifts from clients, though not always implicitly, Wawro says. Only presents with smaller values do not have to be declared as operating income – the tax exemption limit is about €10.

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7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network.