What are incentive trips?
Incentive travel? What are incentives anyway? We already dealt with this in one of our last blog posts. Today we want to talk about a special form of incentives: Incentive trips.
In order to understand what incentive trips are, let’s first clarify the term “incentives”. So first a little digression from our last blog post: Incentive is derived from the Latin “incedere”. This, in turn, means “to kindle enthusiasm” or “to ignite”, “to enlighten” as well as “to increase”.
Incentive trips can also be described well with all these terms. Supervisors thus recognise the work of employees with such a trip, which in turn increases enthusiasm for the job, sparks new motivation and strengthens the bond with the company.
Incentive trips are a combination of exclusivity, community spirit and experience. They have a significant effect on the team spirit and motivation of the employees and increase their identification with the company. That is why incentive trips have become an indispensable part of the business world. If you want to generate profit, you need the corresponding know-how in the company, which in turn is provided by the right employees. In order to bind them to the company in the long term, incentives are obligatory.
So how do you find the right incentive?
First and foremost, the personal added value and the recognition of the employees’ respective performance determine the character of the incentive. Perhaps an exclusive gala dinner with a prominent chef de cuisine is the right thing? Or perhaps a luxury trip to Dubai? Or a gold medal presented by the company’s board of directors? All of this may or may not be possible. It all depends on your individual company and, of course, your employees or the type of achievements that are to be recognised.
What is decisive, however, is the common thread that should run from A to Z through your journey. It should be credible and motivating. In the best case, this thread also runs through your everyday competitive life. In this way, your company is also reflected in your incentive trip. And beware: this is not something that is only established after the start of the trip, but starts as early as the planning of the trip.
What makes incentive trips different?
Above all, employee incentives must be different from tourist package tours or a conventional company outing, because they are supposed to be something special. Nowadays, however, more is demanded – more from everyone – both from the employees in the company and from your incentive trip. So, there should be added value to your trip in any case. The trend is currently moving away from pure luxury trips and towards an experience-oriented gain in knowledge, as well as experience and credible recognition. Today, more than ever, the corporate identity of your company must match your incentive trip.
To present your company appropriately, there are almost no limits to your imagination. Whether incentives on the island of Sylt, events in the South of France or team building in Austria – every trip and every destination has its advantages and one of the countless travel options is also a perfect fit for you, your employees and your company.
There are different options for your incentive trip. The most common types are city trips, adventure trips and community activities such as climbing, hiking, canyoning or rallies.
Incentive events and incentive trips
A small digression: Incentive events pursue the same goals as incentive trips, only they are organised as stationary events and are not connected with a trip. The above activities can also be carried out for this purpose. Often, unusual locations and activities are sought within the city of the company’s headquarters, or special entertainment and exclusive catering are planned.
A professional incentive service provider will organise your individual incentive trip exactly according to your wishes and ideas from start to finish. To motivate your employees in the long term and to reward them appropriately for their achievements, you need a strong partner with passion and an eye for every detail. Your agency of choice will take care to select the right destination for your target group and work out an individual programme tailored to your needs. The incentive trips can, of course, be implemented throughout Europe and even worldwide. Would you like to take your business partners and employees to the Seychelles for a team event or a dinner above the rooftops of Dubai? Or would you rather go to Thuringia for a regional incentive? Both options have their merits and should in any case be tailored to your company. However, it is crucial that the reward character is considered appropriately and also has a long-term effect. Because one thing is certain: incentive trips are not a question of budget – but rather a question of idea.
When planning an incentive trip, however, there are other points of interest besides destination and programme:
For example, what about the tax treatment of incentives according to the German Income Tax Act (EStG)?
Incentives serve in the broadest sense as remuneration for services rendered. Accordingly, they are also subject to wage tax deduction in payroll accounting. For social security purposes, all income is considered remuneration for work if it is earned directly or indirectly from employment and is therefore also subject to social security contributions. Incentive trips also fall within this framework. An exception and thus exemption from contributions for incentives are benefits in kind that are taxed at a flat rate.
If one takes a closer look at the case law, the wage tax liability of incentives results from the general definition of wages in § 2 LStDV. The case law on the tax liability of incentive trips is summarised in H 19.7 LStH. The flat tax rate of 30% and its requirements are again in § 37b EStG.
In the case of social security, the obligation to pay contributions is laid down in § 14 SGB IV. The lump-sum taxed premiums in kind are set out in § 37a EStG and its exceptions in § 1 para. 1 sentence 1 no. 14 SvEV. This is because if lump-sum taxed non-cash benefits are granted to employees of third parties, they are exempt from contributions according to § 1 para. 1 sentence 1 no. 14 SvEV.
In summary, incentive trips serve to motivate employees, create incentives for employees, provide an incentive to be among the best employees, strengthen business relationships with your partners and promote customer satisfaction.
Don’t miss our next blog post, in which we will address the next topic from the world of events. Do you have any questions about our contribution or our services? Feel free to contact us and let us know your comments and wishes.