Alcohol expenses for business meetings

It happens that during a business meeting, in addition to coffee and tea, alcohol is also served. However, many entrepreneurs have a dilemma whether expenses on alcohol at business meetings can be tax-deductible? The matter is not clear-cut, but the tax office is approaching this issue more and more gently.

Definition of tax deductible costs

Pursuant to Art. 22 sec. 1 of the Personal Income Tax Act (PIT), tax deductible costs are the costs incurred in order to achieve revenues or to maintain or secure the source of these revenues - with the exception of costs included in art. 23. The above-mentioned exclusions indicated that tax deductible costs may not include, inter alia, representation costs, including, in particular, expenses for catering services, purchase of food and beverages (including alcoholic drinks).

There is no definition of representation costs in the tax regulations. Therefore, there may be frequent problems with the appropriate classification of individual expenses. According to the definition contained in the dictionary of the Polish language, "representation is grandeur, lavishness in someone's way of life, related to the position, social position". The jurisprudence of administrative courts indicates that the costs of representation include expenses that present the entrepreneur in a favorable light and create a positive image of the company.

Food and drink expenses - the position of the tax authorities

However, the tax authorities do not exclude the possibility of classifying the expenses for refreshments as tax deductible costs. An example of such a position is the general interpretation of the Minister of Finance of November 25, 2013, DD6 / 033/127 / SOH / 2013 / RD-120521. According to its wording, expenses for small snacks (e.g. cookies, biscuits), drinks (coffee, tea, juices, water), as well as meals (e.g. lunches and lunches) are not subject to tax-deductible costs, if the snacks are served during conducting talks with contractors, contractors, etc. about matters related to business activity. It does not matter whether the snack is served at the company's premises or outside.

Expenditure on alcohol in the interpretations of tax authorities

According to the position of the tax authorities, expenses for alcohol incurred at business meetings are not explicitly excluded from the tax deductible costs.

Confirmation of the position of the tax authorities open in this matter is the individual interpretation of the Director of the Tax Chamber in Katowice of 12 December 2014 (IBPBI / 1 / 423-36 / 14 / ESZ): “(...) pursuant to Art. 16 sec. 1 point 28 of the CIT Act, expenses incurred by the company on alcoholic and non-alcoholic beverages, usually served during the above-mentioned meetings with contractors, distributors, authors, writers (including potential), regardless of the place of these meetings (at the taxpayer's office or outside), regarding the scope of the company's business activities. Therefore, the above-mentioned expenses incurred by the company in connection with business meetings with the above-mentioned entities may constitute a tax deductible cost. "

Expenses on alcohol during business meetings - the position of the Ministry of Finance

This position was additionally confirmed by the Ministry of Finance in a statement to PAP in February 2015. According to the Ministry of Finance, each case should be subject to a separate analysis, which will allow to assess the relationship between expenses incurred on alcohol and corporate revenues.

Undoubtedly, expenses for alcohol incurred during any social gatherings are excluded from tax deductible costs. In other cases, however, you should analyze the exact circumstances related to the purchase of alcohol.

To sum up, the tax authorities' view of the issue of including lunches (during which alcohol is also served) with current or potential business partners among the costs of corporate dinners always depends on the circumstances justifying their incurrence.

Each time it is necessary to check whether they serve to generate revenues or to preserve or secure their source, so it is always worth taking care of appropriate documentation.