| 08 December, 2023

Claiming expenses for a staff Christmas party

Staff Christmas party and tax-deductible expenses

In order to have the cost of a company Christmas event qualified as a tax-deductible expense*, it cannot just take the form of a Christmas dinner or feast. For such an event to constitute a tax-deductible expense, the organizer has to determine its goal and specify the expected results. Team-building or boosting staff motivation may serve as a sample goal that shall, in turn, translate into higher revenue earned by the company.

In practice, this entails the need to prepare an “Event Agenda” specifying its purpose and listing the different forms of team-building and motivation-boosting activities that the employees will participate in throughout the dinner. These may include, e.g., contests with prizes, games, recognition awards for best employees, etc.

A “Final Event Report” and/or additional documentation in the form of a photo report is also worth keeping. All materials should be prepared diligently so that, in the event of a possible inspection, you can efficiently demonstrate the correlation between the organized event and, for example, the increased involvement of employees in the achievement of certain business goals.

Deducting VAT for a staff Christmas party

Oftentimes, pre-Christmas staff meet-ups take place in restaurants or other locations outside the company's registered office, such as hotels. Hence, if a catering/food service is purchased in a situation like this, the applicable VAT shall not be deductible, in accordance with Article 88, section 1, item 4 of the VAT Act.

On the other hand, if the company organizes a Christmas party on its premises or rents a conference room for a pre-Christmas meeting and orders a catering service - the VAT deduction will apply to both the rental of the room and the catering, regardless of whether the catering is delivered to the company's premises or the rented room.

Contact our experts!

We specialize in legal, accounting, and tax services for business entities. We will be happy to answer any questions you may have regarding various aspects of accounting for company Christmas events.

Contact us at: office@tias.pl