Cologne public prosecutor investigates: Focus on tax money for city celebrations!

Cologne public prosecutor investigates: Focus on tax money for city celebrations!

The Cologne public prosecutor's office has initiated a preliminary investigation into the Cologne city administration's company parties and festivals. The triggers are reports in Cologne City Gazette, which address possible violations of tax law. The focus of the investigation is particularly on checking whether there is initial suspicion of a crime, such as infidelity. However, this preliminary examination could take a longer period of time.

A crucial aspect in this context is the city administration's expenditure on company parties. According to the NRW Taxpayers' Association, a city is allowed to spend a maximum of 110 euros per employee on two company events per year. Recently, the City Auditor's Office (RPA) determined that some of these expenses may be subject to subsequent taxation. The anti-corruption officer also reminded that the use of city funds for certain events is not permitted.

Expenditure confusion

Mayor Henriette Reker has already confirmed that the anti-corruption commissioner's announcement has caused uncertainty within the city administration. During random checks of 70 bookings, the RPA found that 20 had anomalies. Nevertheless, overall it was found that the use of municipal resources was largely unremarkable.

What particularly caught the eye was the expenditure of the municipal theaters, which spent 178,200 euros on 17 festivals in the past three years. An example of high costs is the spring festival of the stages, which cost 28,629.92 euros, of which the employees themselves contributed 7,895.87 euros. The management defended the celebrations by saying that the employees were heavily burdened by public criticism of construction projects and that such events could promote important solidarity.

Tax aspects of company parties

Another exciting point are the tax regulations surrounding these events. A ruling by the Cologne Finance Court in 2018 made it clear that expenses for company parties are considered benefits to employees, with an allowance of 110 euros per participant and event. But anyone who exceeds this allowance must expect tax consequences and can lose the input tax deduction. These aspects are particularly relevant as the city faces a budget crisis and is forced to save.

In addition to the regulations regarding allowances, high costs for external events must also be taken into account. Companies are advised to lodge an objection against tax assessments with the tax office and to suspend the proceedings if they have doubts about the decisions. A list of participants could be useful for tax comprehensibility, while the expenses are distributed among the employees on the basis of the gross amounts.

The current situation in the city administration, which is experiencing a budget crisis, makes it clear that the regulations and financing rules surrounding company parties need to be viewed more strictly. Reker also announced that a new guideline for municipal celebrations will be published soon, which could provide more clarity on these matters. In the hope of clearing up the ambiguities and concerns as quickly as possible, it remains to be seen how the process will develop.

The Cologne district government currently sees no reason to intervene as long as no legal violation is identified. Nevertheless, the situation remains tense, especially with regard to possible back payments and future expenses for municipal festivals.