Participation in fairs and conferences and the company's cost
The entrepreneur, in order to expand his knowledge and business contacts in the conducted activity, may participate in fairs and conferences. However, can the expenses incurred in this respect be included in the company's costs? We answer below.
Tax deductible - definition
Pursuant to the Personal Income Tax Act, tax deductible costs are costs incurred in order to obtain income, secure it or maintain its source. These expenses must be properly documented - by an invoice or a bill.
It should also be borne in mind that the aforementioned act also contains a catalog of expenses that may not be tax-deductible under any circumstances. The list of these costs is included in Art. 23 of the PIT Act.
The taxpayer must also be aware that in the event of doubts of the tax authorities as to the recognition of a given expense, they are obliged to prove the relationship between the cost incurred and the activity conducted.
Participation in fairs and conferences in tax costs
In a situation where participation in fairs and conferences meets the above-mentioned conditions, there are no contraindications to include this expense as tax costs.
At the same time, there are no restrictions on the deduction of VAT, and therefore the entrepreneur has the right to fully deduct VAT from expenses related to participation in fairs and conferences, assuming that it was incurred in connection with taxable activities.
However, before classifying expenses as tax costs, the taxpayer should read the aforementioned Art. 23 of the PIT Act in order to determine whether the incurred expenses were not listed in this article as those that do not constitute tax costs.
Participation in fairs and conferences and restrictions on VAT deduction
By participating in fairs and conferences, an entrepreneur often incurs expenses related to hotel or catering services.
As stipulated in the VAT Act, taxpayers are not entitled to reduce output tax by the amount of input tax on hotel invoices and catering services.
In a situation where the expenses for the hotel and catering services can be included in the tax costs, they should be booked in the gross amount. Then the VAT on these invoices will not be deducted. However, this expense will be fully recognized in the revenue and expense ledger in column 13.