Can you deduct VAT on drinks and snacks for employees?
December 15, 2022
Employers wanting to ensure comfortable working conditions in the office often provide their employees with various types of drinks in public spaces such as kitchens or social rooms. Coffee, tea, water, milk and sugar are most often available to employees. In addition, some employers also purchase fruit or small snacks for their employees. In such situations, the question arises whether you can deduct VAT on drinks and snacks for employees or not.
Relationship between the goods and taxable activities
The assessment of the right to deduct should start from the general rule resulting from Art. 86 sec. 1 of the VAT Act [1]. Pursuant to this provision, to the extent that goods and services are used to perform taxable activities, the taxpayer has the right to reduce the amount of tax due by the amount of input tax. Therefore, it will be crucial to demonstrate the relationship between the purchased goods (beverages, fruit, snacks) and taxable activities. This relationship can be both indirect and direct.
Deduction of the input tax shown on invoices
Najnowsze stanowiska organów podatkowych wskazują, że w przypadku jeśli pracodawca udostępnia pracownikom do swobodnego korzystania w trakcie pracy napoje takie jak kawa, herbata, woda czy też drobne przekąski lub owoce, nie występuje związek przyczynowy z czynnościami opodatkowywanymi. W konsekwencji brak jest po stronie pracodawcy praw do odliczenia podatku naliczonego wykazanego na fakturach dokumentujących zakup tego rodzaju towarów.
This position was presented in in the individual interpretation of the tax law of May 13, 2022. ref. 0114-KDIP4-2.4012.137.2022.1.MC, in which the authority stated:
„the need to provide food and beverages to employees during breaks at work does not result from any regulations (e.g. health and safety at work), and is not necessary for the purposes of business activity (as is clear from the above-mentioned ruling of the CJEU), because employees are obliged to perform work regardless of the refreshments that the employer serves them voluntarily. It is up to the employee to choose whether to use the meal and to determine the place and time of its consumption. (…) consequently, purchases of food products used in the above-mentioned circumstances are not related to the performance of taxable activities. Therefore, there is no right to deduct input tax on the purchase of food products used for the employees’ personal needs.“
A similar view was presented in the individual interpretation of the tax law of April 2, 2021, No. 0114-KDIP4-3.4012.2.2021.2.IG.
Output tax related to gratuitous transfer
It should be noted that if the employer is not entitled to deduct input tax from invoices documenting the purchase of beverages or snacks made available to employees, then there is also no need to calculate the output tax related to gratuitous transfer.
Deduction of VAT on business meeting expenses
It should be emphasized that the tax authorities support the right to deduct input tax on food products that are made available during business or internal meetings. It is as part of the performance of employee duties. Making such products available during such meetings shows – according to the authorities – an indirect connection with the performance of taxable activies by the employer as a taxpayer.
[1] Act of March 11, 2004. on tax on goods and services (i.e. Journal of Laws of 2021, item 685, as amended)
