Tax-Free Employee Gifts in Germany: The €50 Sachbezug Rule (2026)

Last updated: August 2026

If you have read American HR content on this subject, discard it before you read this guide. In the US the answer is a flat no: the IRS treats every gift card as a cash equivalent, taxable at any value, with no de minimis relief. Germany takes the opposite position — a properly structured non-cash benefit is genuinely tax-free and contribution-free, month after month, with no annual cap. An employer running the €50 allowance every month delivers €600 a year per person at a cost of exactly €600.

But the German rules are formal in a way the UK trivial benefits exemption is not. The UK asks you to judge intent — was this a reward for services? Germany asks you to satisfy a technical test about the payment instrument itself. A card that works perfectly for a UK trivial benefit can fail in Germany purely because of where it can be spent.

This guide covers the position for the 2026 calendar year, in English, with the German statutory references your Steuerberater and payroll provider will expect to see. It is written for HR, People Ops and finance teams building or cleaning up a rewards programme with German employees. It is general information, not tax advice for your circumstances — confirm treatment with your Steuerberater before changing payroll practice.

The €50 rule, precisely

The legal basis is §8(2) sentence 11 EStG (Einkommensteuergesetz). Non-cash benefits (Sachbezüge) provided to an employee remain untaxed if their total value in a given calendar month does not exceed €50, including VAT. Because the benefit is not wages, it is also free of social security contributions — which is where most of the value sits for the employer.

The threshold rose from €44 to €50 on 1 January 2022 and has not moved since. It is €50 for 2026. Proposals to raise it further have been floated repeatedly and have not been enacted; do not budget on the assumption of an increase.

Why most prepaid cards fail — the ZAG test

This is the part international employers get wrong, and it is the part that is genuinely specific to Germany.

Before 2022, more or less any voucher counted as a non-cash benefit. Then the legislature drew a hard line between a Geldleistung (a cash payment, always wages) and a Sachbezug (a benefit in kind, potentially exempt). Since 1 January 2022, a voucher or prepaid card is only a Sachbezug if it entitles the holder exclusively to goods or services and meets the criteria of §2(1) no. 10 of the Zahlungsdiensteaufsichtsgesetz (ZAG). The Federal Ministry of Finance set out its interpretation in a BMF letter dated 13 April 2021, which has applied since 2022 and still governs today.

There are three qualifying routes. A card needs to satisfy only one of them.

What disqualifies a card outright: a cash withdrawal function, the ability to pay the balance out in money, crediting the value to a bank account, use as a general payment instrument accepted anywhere, or person-to-person transfer. This is why a general-purpose Visa or Mastercard prepaid card — which is exactly the right tool in plenty of other countries — does not work for the German €50 Sachbezug. It is too close to money. Employers running a single global reward catalogue frequently discover this during a Lohnsteuer-Außenprüfung rather than beforehand.

The other €60: Aufmerksamkeiten

Alongside the €50 monthly limit sits a second, separate exemption that is widely under-used. R 19.6 LStR (Lohnsteuer-Richtlinien) treats small non-cash gifts given on the occasion of a special personal event as not being wages at all, up to €60 per occasion, including VAT.

Crucially, this is per occasion, not per month, and it does not consume the €50 Sachbezug limit. If an employee has a birthday in March and their child starts school in the same March, both €60 gifts are exempt — and the €50 card you send that month is still exempt too.

Two further conditions apply. The gift must be given close in time to the actual event and in concrete connection with it — you cannot batch birthday gifts into an annual December handout and keep the exemption. And money is never an Aufmerksamkeit, however modest: a €20 cash gift for a birthday is wages, while a €60 bunch of flowers, book or qualifying voucher is not.

Company events: €110, and what changed on 1 January 2026

Company events (Betriebsveranstaltungen) run on their own rules under §19(1) sentence 1 no. 1a EStG. Each employee has a €110 allowance per event — and here it genuinely is a Freibetrag, not a Freigrenze, so only the excess above €110 is taxable. The allowance is available for a maximum of two events per calendar year. The €110 is measured including VAT and includes the costs attributable to accompanying family members.

This is the one area where 2026 brought a real change, and it tightens the rules.

Historically, the "open to all employees" requirement attached to the €110 allowance but not to the 25% flat-rate taxation option under §40(2) EStG. The Bundesfinanzhof confirmed as much in its decision of 27 March 2024 (VI R 5/22), which allowed flat-rate taxation even for restricted-access events such as a managers-only dinner. The Jahressteuergesetz 2025 reversed that outcome by writing the stricter requirement into the statute.

When you exceed the limits: §37b and the contribution sting

Sometimes you want to give more than the exemptions allow — a substantial long-service award, a high-value incentive. §37b EStG lets the employer settle the recipient's tax on non-cash benefits at a flat 30%, plus solidarity surcharge and church tax, so the gift lands with the employee free of income tax. It applies to gifts to employees and to third parties such as customers and business partners, and is capped at €10,000 per recipient per year.

It is an election (Wahlrecht), and it must be exercised consistently: for a given category in a given financial year you apply it to all recipients or none.

Gifts to customers and business partners

A different rule governs gifts to people who are not your employees. Under §4(5) sentence 1 no. 1 EStG, such gifts are deductible as a business expense only up to €50 per recipient per year — raised from €35 by the Wachstumschancengesetz with effect from 1 January 2024.

This is a Freigrenze too, and an unusually brutal one: exceed €50 across the year by a single cent and the deduction is lost in full, not merely for the excess. Note that the limit is annual and cumulative per recipient — three €20 gifts to the same client across a year total €60 and forfeit the deduction on all of them. Low-value promotional items (Streuwerbeartikel) of up to €10 are generally left out of the calculation.

If you want the recipient not to have to declare the gift as income, §37b covers this case too, at the same 30% flat rate. It is common practice to pair a compliant business gift with a §37b election and tell the recipient the tax has been settled.

The compliance checklist

Run this before your next German reward cycle.

• Confirm the card passes ZAG. Ask your supplier in writing which of the three §2(1) no. 10 routes the card relies on. Closed-loop retailer cards are the safe answer; open-loop prepaid is not.
• Aggregate everything in the month. Add up all §8(2) non-cash benefits per employee per month — benefits cards, fuel cards, gift cards, memberships. The total, not each item, must stay at or below €50.
• Never round up past €50. Build the catalogue so the maximum selectable value is €50, and make it impossible for a manager to send €55 "just this once".
• Check the Zusätzlichkeit. The benefit must be additional to contractual pay. Remove any arrangement that looks like salary conversion.
• Document the occasion for every €60 Aufmerksamkeit. Record what the event was and when it happened. The exemption depends on a genuine, contemporaneous personal occasion, and that is what an audit will ask about.
• Re-check your event policy against the 2026 rule. Any event that is not open to all members of the business unit has lost access to the 25% flat rate.
• Never give money. Cash, cash-equivalent vouchers and reimbursements are wages at any value, under every one of these provisions.
• Keep per-employee, per-month records. The exemptions are individual and periodic; programme-level totals will not satisfy a Lohnsteuer-Außenprüfung.

Germany in context

If you reward employees in more than one country, the differences matter more than the similarities. Here is how Germany sits against the other jurisdictions we cover in depth.

The practical consequence for a multi-country programme is that one reward value and one card type cannot be correct everywhere. A €50 closed-loop card is optimal in Germany and unnecessary in the US, where the same reward is taxable regardless. Our guide to rewarding remote teams across 10+ countries covers the wider picture, and the CFO budgeting framework covers how to model the gross-up cost where exemptions are not available.

Frequently asked questions

Sources

• §8(2) sentence 11 EStG — the €50 monthly Sachbezugsfreigrenze, unchanged for 2026 since the increase from €44 on 1 January 2022
• §8(4) EStG — the Zusätzlichkeitsprinzip; benefits must be granted in addition to pay already owed, excluding salary conversion
• §2(1) no. 10 ZAG and the BMF letter of 13 April 2021 — the three qualifying routes for vouchers and prepaid cards (limited network, limited product range, social or tax purpose), applicable since 2022, and the position that a Merchant Category Code alone is insufficient
• R 19.6 LStR — Aufmerksamkeiten up to €60 per special personal occasion; Christmas excluded; monetary gifts always wages
• §19(1) sentence 1 no. 1a EStG — the €110 per-employee company-event allowance for up to two events per year
• Jahressteuergesetz 2025, amending §40(2) sentence 1 no. 2 EStG — the open-to-all requirement for 25% flat-rate taxation of company events from 1 January 2026, reversing BFH, 27 March 2024, VI R 5/22
• §37b EStG — 30% flat-rate taxation of non-cash benefits, capped at €10,000 per recipient per year, exercised consistently; benefits to employees remain subject to social security contributions
• §4(5) sentence 1 no. 1 EStG, as amended by the Wachstumschancengesetz — the €50 annual deduction limit for gifts to non-employees, raised from €35 with effect from 2024
• 2026 social security contribution rates — pension 18.6%, unemployment 2.6%, health 14.6% plus the insurer-specific additional contribution, long-term care 3.6%, shared broadly equally between employer and employee

All figures verified against the sources above in August 2026 and stated on 2026 rates. Contribution rates vary by health insurer and personal circumstances, and the illustrative cost figures in this article are rounded approximations rather than a payroll calculation. Tax rules change; confirm current limits before relying on them. This article is general information and not tax, legal or accounting advice — consult your Steuerberater before changing payroll practice.