Entertainment Expenses in a GmbH 2026: Deducting Business Meals in Germany

If you run a GmbH in Germany, taking clients, suppliers or partners out for meals is part of doing business. These costs are deductible as business expenses – but only under specific conditions the tax office enforces strictly, or the deduction is denied entirely.

In Brief

• Business entertainment (clients, suppliers, partners) is only 70% deductible as an expense; 30% is lost for tax purposes (§ 4 para. 5 no. 2 EStG).
• Internal hospitality for your own staff only is 100% deductible.
• GmbH-specific: a privately motivated meal paid by the GmbH becomes a hidden profit distribution – more expensive than for a sole trader.
• Input VAT is always fully (100%) recoverable – even on the non-deductible 30% share (§ 15 UStG).
• The deduction stands or falls on the entertainment record: location, date, specific occasion, all attendees, amount, signature.
• Above €250 gross, the restaurant invoice must show your GmbH's name; below that, a simplified small-amount invoice is enough.
• Since the BMF letter of 19 November 2025, a fully digital proof (e-invoice + digital self-record) is explicitly allowed – but invoice and self-record must be digitally linked.
• Retention period for entertainment receipts: 8 years since 2025 (§ 147 para. 3 AO).

What Are Entertainment Expenses (Bewirtungskosten)?

Entertainment expenses are costs for hosting people for a business purpose (§ 4 para. 5 no. 2 EStG): restaurant meals with clients, customer receptions, or catered networking events. The key is a clear business occasion – private dinners, even with business contacts, do not qualify.

It matters how you separate these from similar costs, which follow different rules:

As soon as one external business partner is at the table, the 70% rule applies – even if your own employees eat too.

The 70% Rule: Business vs. Internal

Entertainment expenses with a business occasion are only 70% deductible as a business expense under § 4 para. 5 no. 2 EStG. The remaining 30% is non-deductible, regardless of how clear the business purpose is. The law assumes a flat private-enjoyment share.

If you host only your own employees (e.g. an internal team meeting with a meal), it counts as internal hospitality – 100% deductible, outside the 70% limit.

For a full list of what your GmbH can deduct, see GmbH business expenses in Germany 2026.

Worked Example: How Much Your GmbH Saves

A business meal costs €220 gross (€200 net plus €20 VAT). Since 1 January 2026 food is taxed at the reduced 7% rate and drinks at 19% – here that adds up to €20 of VAT.

• Business expense: 70% of €200 = €140 reduces corporate and trade tax.
• Non-deductible: 30% of €200 = €60 – neither for corporate income tax nor trade tax.
• Input VAT: the full €20 is recovered on your VAT return.

Effective tax relief is therefore €140 as an expense plus €20 of input VAT. Only the €60 non-deductible share is a final cost to your GmbH.

Input VAT Deduction: 100% Despite the 70% Rule

For VAT there is a surprising exception: you can claim the full input VAT from the invoice – not just 70% of it (§ 15 UStG). The 70% cut applies only to income taxes, never to VAT.

You need a proper invoice with VAT shown separately. Our guide to input VAT deduction in Germany explains the mechanics in detail.

The GmbH Special Case: Hidden Profit Distribution

Unlike a sole trader, in a GmbH the company bears the cost – not the managing shareholder personally. That creates a GmbH-specific trap: if the GmbH books a meal as entertainment that is in fact privately motivated (the managing director's birthday, a dinner with friends), the tax office reclassifies it as a hidden profit distribution (verdeckte Gewinnausschüttung, vGA).

This is expensive twice over: the cost does not reduce profit, and the shareholder is additionally taxed on the amount as investment income. Corporate income tax applies at the GmbH level and capital gains tax (25% plus solidarity surcharge) at the shareholder level. For a sole trader the same event would only be a non-deductible private withdrawal. That is why a specific, provable business occasion matters even more for a GmbH. See our article on hidden profit distribution.

How a GmbH Books Entertainment Expenses

A GmbH must keep double-entry books and records entertainment costs – unlike a sole trader in the EÜR – on separate accounts for the deductible and non-deductible share:

The deductible share reduces corporate and trade tax; the non-deductible share is added back outside the balance sheet. Our guide to GmbH bookkeeping covers the full picture. If you are a sole trader or freelancer, the same 70% applies but you book it through the EÜR – see entertainment expenses for the self-employed.

The Entertainment Record: Fields the Tax Office Requires

The tax office only accepts entertainment expenses with a complete entertainment record (Bewirtungsbeleg). If one required field is missing, the whole business-expense deduction is at risk. Document these promptly:

A till receipt alone is not enough. You need a machine-generated, registered restaurant invoice showing VAT, plus the extra details on occasion and attendees. A handwritten invoice is no longer accepted.

The €250 Threshold: Small-Amount Invoice

How much detail the restaurant invoice must carry depends on the amount:

Above €250 gross the restaurant must state your GmbH's full name on the invoice. If it is missing, the tax authorities allow you to add it yourself – but it is safer to have the restaurant enter it right away.

Deducting Tips Correctly

Tips are deductible entertainment expenses – but only with proof. If the tip is not on the invoice, document it with a self-record that the server ideally counter-signs. A tip up to a customary level (around 10% of the invoice) is generally accepted even via a handwritten self-record. The tip is also subject to the 70% cut.

Digital and E-Invoicing: What the 2025 BMF Letter Requires

With mandatory e-invoicing for domestic B2B since 1 January 2025, the Federal Ministry of Finance updated the proof rules. The BMF letter of 19 November 2025 supplements the earlier 2021 letter and confirms: proof may be fully digital.

• Restaurants may issue the entertainment invoice as an e-invoice.
• The self-record (occasion and attendees) may be created or scanned digitally – authorized by electronic signature or electronic approval, stored unalterably.
• Digital self-record and digital invoice must be digitally linked, e.g. via a unique index, barcode, or a document management system.

The principle is "once digital, always digital": a receipt captured digitally must be kept digitally and audit-proof throughout – printing it later does not replace orderly digital storage. Our article on digital receipt management in Germany explains GoBD-compliant handling.

Common Mistakes and How to Avoid Them

Most deletions in a tax audit come not from bad intent but from formal gaps:

Business meal deductions are a perennial topic in GmbH tax audits – persistently high entertainment costs can even trigger a tax audit. Clean documentation matters all the more.

Track Entertainment Receipts Digitally with Norman

With Norman's AI bookkeeping, you photograph receipts on your phone – the AI reads out amounts, dates and locations, books the 70% correctly as a business expense, and claims the full input VAT. Invoice and digital self-record stay linked and archived in a GoBD-compliant, audit-proof way. That meets the 2025 BMF requirements without you doing the maths.

Frequently Asked Questions

What percentage of entertainment expenses can a GmbH deduct? For a business occasion, 70% as a business expense; the remaining 30% is non-deductible. Input VAT, however, is 100% recoverable.

Are meals for my own staff also only 70% deductible? No. If you host only your own employees, it is internal hospitality – 100% deductible. As soon as one external partner joins, the 70% rule applies.

Is a till receipt enough as an entertainment record? No. You need a machine-generated, registered restaurant invoice showing VAT, plus the occasion and attendees. A plain till receipt is not sufficient.

How long must I keep entertainment receipts? As accounting vouchers, eight years since 2025 (§ 147 para. 3 AO); previously it was ten years.

Can I prove entertainment expenses fully digitally? Yes. Since the BMF letter of 19 November 2025, an e-invoice plus a digital self-record are allowed, provided both are archived digitally, unalterably, and linked.

Conclusion

Business meal deductions are a frequent topic in GmbH tax audits. Know the 70% rule, claim the full input VAT, keep complete records, and hold your documentation fully digital since 2025 – and you avoid back payments. For more on GmbH tax filing in Germany, visit our product page.