Christmas party 2022 – Does your company have a handle on the rules for tax and VAT?
It is almost time for this year’s Company Christmas party. Below we give you an overview of the tax and VAT rules for deductions
Own premises
If the Christmas lunch is held on the company’s own premises, the VAT cannot be deducted in the VAT account. However, there are certain costs that can be deducted. This applies if tables, chairs and crockery are rented outside the city for the apartment.
If, for example, beer or wine tasting or other entertainment is arranged as part of the Christmas lunch or as a prelude to it, the VAT on the expenses for this cannot be deducted either.
Out on the town
If the Christmas lunch is held out in the city at a restaurant or similar, ¼ of the VAT can be deducted. This is also the case if the employees’ spouses participate in the event. If the company provides transport to the party, possibly by renting a bus, to and from the event, the VAT can be fully deducted from the bus bill.
If the company pays for accommodation after the party, the VAT can be deducted on the cost of this – However, only ¼ of the VAT on the cost of breakfast the next day can be deducted. Pay particular attention to the fact that if breakfast and accommodation are invoiced for a total amount, no part of the VAT can be deducted.
Christmas tree parties
If your company is considering holding a Christmas tree party for employees and their families. VAT applies to the related expenses, in the same way as for holding Christmas lunches. If the event is held on its own premises, the VAT cannot be deducted. If the event is held in a rented room, e.g. community center or another place outside the city, ¼ of the VAT can be deducted for the costs of the food and drink served.
Costs for entertainment in this connection or gifts for the children cannot be deducted.
What about the tax?
The company has a tax deduction for expenses incurred in connection with a Christmas lunch for the staff.
If, on the other hand, a Christmas lunch is held for customers or business partners, this will be a representation expense, and the company will then only have a tax deduction of 25% of the expense.
