002. Deductibility of Food and Drink Expense

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German tax law limits or denies the deductibility of various types of expenses. It also provides that certain expenses, while deductible in whole or in part, must be separately recorded on the company's books (section 4 par. 7 EStG).

The cost of food and drink for third persons for business reasons (in German: "Bewirtungsaufwendungen", loosely "restaurant expense") must be separately recorded. 80 % of such expense is deductible to the extent reasonable in amount. Pure entertainment (theater etc.) is covered by a general clause denying the deductibility of such items despite their business context to the extent they are considered unreasonably high. Such pure entertainment expense should be recorded separately from food and drink expense (restaurant expense).