Christmas time is almost here and in this time of the year many companies celebrate Christmas lunchs or Christmas dinners with their employees and there are still companies that give their employees a basket full of food and drink as a gift.Companies will ask the suppliers for an invoice to deduct the expenditure but is correct the deduction of such expenses?
Article 14.1 of the Corporation tax sets that are not deductible donations, other than charges for public relations with customers or suppliers or that under the customs to be made with respect to the company staff. This means that if the company has a habit of making a Christmas dinner or offer to the workers meal and drink hampers, then the bill may be deductible in the company’s accounts.
This includes the obligation to justify the expense and its nature as well as its adaptation to the habit. Therefore, once we take over a year to give these gifts and preserving the proof , we can show that it has become customary in the business. The hard part is to prove it on the first year.
Furthermore, the delivery of Christmas hampers to the workers will have the consideration of salary (payment in kind) and it’s not free of tax. So Its value, estimated market price , must be included in the payroll and also included in the National insurance statements.
The VAT on these expenses will not be deductible, since Article 96 VAT Law states that may not be deductible in respect of goods or services for hospitality clients, employees or third parties. Free samples and promotional items that do not exceed the amount of 90.15 Euros during the calendar year to a single recipient are excluded.
If you are a worker and your boss gave you a Christmas basket with a delicious ham keep in mind that you will have to pay taxes on the gift, but think you are lucky because are becoming less the number of companies regale their workers with this kind of Christmas gift.
For further details please contact VP Advisers
No comments:
Post a Comment