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In Brief
04. Sep 2025

Tax thresholds - Differentiating between gross and net values

Tax thresholds are provided for in numerous regulations and are often the determining factor for claiming a tax benefit. In practical terms, it is relevant to ask whether the respective threshold needs to be verified on a gross or net basis. There is no one single answer - it depends on the respective regulation.

Gifts to business associates

Expenses for gifts to business associates are only deductible if they then do not exceed €50 per recipient and calendar year (Section 4(5) no. 1 of the Income Tax Act [Einkommenssteuergesetz, EStG]). If this threshold is breached then none of the total expenses would be deductible.

  • Companies that are entitled to deduct input tax may use the net value as a basis. At a VAT rate of 19% this would correspond to gross expenses of up to €59.50. It should be noted that if the €50 net value is exceeded then the input tax deduction would likewise no longer be applicable (Section 15(1a) of the German VAT Act).
  • If no entitlement to deduct input tax exists then the gross value would apply.

Low-value assets

Instead of depreciating independently usable fixed assets over their average operating lives, it is possible to immediately write them off if the acquisition or production costs do not exceed €800 (Section 6(2) EStG). The determining criterion is always the net value, irrespective of an entitlement to deduct input tax.

Please note

A planned increase to €1,000, which was proposed in 2024, was not adopted. The €1,000 limit applies solely for so-called pool depreciation.

Employee-related thresholds

The gross value generally applies under payroll tax legislation. This concerns, in particular:

  • the monthly exemption limit for payments in kind in the amount of €50 (Section 8(2) sentence 11 EStG), and
  • the €60 limit for token gifts on the occasion of special personal events (Guideline 19.6 of the German Payroll Tax Guidelines).

Please note

In the case of non-cash benefits, employers must therefore always take account of the gross amount.

Acquisition-related production costs

In the case of maintenance and modernisation measures within three years of the acquisition of a property, the legal fiction of acquisition-related production costs would apply if the expenses exceed 15% of the acquisition costs incurred for the building section (Section 6(1) no. 1a EStG). The determining criterion for the calculation of the 15% threshold is solely the net costs.