Are you organising an event for employees and contractors? See what about VAT and costs
Team-building events for employees, business conferences, the so-called herring before Christmas? These are beneficial for the company, employees and business partners. It's not just a meeting, a training session or a presentation of the company. It's also an opportunity to eat well or relax in a hotel spa. Alcohol also comes into play. What about the deduction of VAT and costs? Courts are increasingly taking the side of taxpayers, writes Business Insider Polska.
The portal asked Łukasz Woźniak, manager at Thedy & Partners, for a comment on the ruling of the WSA in Łódź (case no. I SA/Łd 587/23), which was favourable for taxpayers.
– The ruling in question by the WSA in Łódź should be assessed positively, he indicated.
In his opinion, as a rule, the authorities want to deprive taxpayers of the possibility to include in their VAT settlements expenses for entertainment services or purchase of alcohol which are part of the purchased comprehensive service in the form of organisation of business and sales conferences or meetings and integration trips. They try to undermine the argumentation as to the connection of these expenses to the conducted business activity. Entrepreneurs have the right to fully deduct VAT not only on purchases that are directly related to their business activities, e.g. the purchase of raw materials for a product, but also on those that are only indirectly related, such as the costs of integrating staff through whom the company carries out taxable activities. In the case of income taxes, on the other hand, the authorities usually recognise this type of expenditure, particularly in the context of alcohol, as being of a representation nature.
In the case decided by the judgment in question, the authority questioned the VAT deductions on alcohol, gym, swimming pool and spa. The WSA in Łódź rightly disagreed with this approach. This is another judgment negating such a restrictive approach of the authority.
It is necessary to bear in mind the overriding objective, where all the listed services make up a comprehensive service of organising a training and integration event. To exclude the purchase of alcohol and additional services (use of the swimming pool, gym, wellness area) would be artificial and unjustifiable.
Although the judgment is not final, hopefully it will contribute to a liberalised approach at least in terms of the right to fully account for expenses under VAT.
The entire article can be read at this link: Imprezy integracyjne, konferencje biznesowe? Zobacz, co z VAT i kosztami (businessinsider.com.pl)