Can employee meals be a tax deductible costs?
20 September 2021
Providing employees with free meals has been one of the most popular employee benefits in recent years. Most often companies offer their employees breakfast, lunch or fruits, but other meals are also popular in the offers of entrepreneurs.
Can the purchase of food products for employees and contractors be a tax deductible expense for employers?
According to the individual interpretation of March 1, 2021, no. 0111-KDIB1-3.4010.24.2020.7.IM, “expenditures for the purchase of food products for employees and for persons employed under civil law contracts affect the revenue obtained by the entrepreneur. Expenses for the purchase of these products financed from the company’s current funds may therefore be included in tax costs”.
Case study:
Meals for contractors may be tax deductible
Expenses for purchase of food for employees and persons employed on the basis of civil law contracts have an impact on the entrepreneur’s revenues. Expenses for the purchase of these products financed from the company’s working capital can therefore be treated as tax deductible costs¹.
Factual state
The applicant is an entity operating in the software industry and employing highly qualified IT specialists. Among the people employed by the applicant there are employees under employment contracts, as well as persons performing work under civil law contracts.
The applicant, following the company’s policy of providing employees with appropriate working conditions, purchases food products. The applicant indicated that providing employees with groceries is now a standard practice in the labor market, without which employees do not decide to be employed by the company.
The purchased groceries are not prophylactic meals and drinks referred to in Article 232 of the Labour Code. The purchased products are generally available to the employees in the course of performing their daily duties and are also “equipment” for the company kitchen. Occasionally, foodstuffs are also served during meetings with the applicant’s counterparties. The applicant finances the purchase of the groceries with his own working capital.
The applicant asked whether he may claim the above-described expenses for the purchase of groceries as tax deductible costs.
Decision of the competent authority
The authority found that the claimant’s expenses on the purchase of groceries for its employees and for persons performing work under civil law contracts are undoubtedly a manifestation and expression of the claimant’s efforts as an employer seeking to improve the work atmosphere, which in turn increases work productivity and, consequently, has an impact on its revenue.
The authority also emphasized that such expenses are not included in the catalog of expenses excluded from tax costs under Article 16 Section 1 of the CIT Act. This is because they are not expenditures for social activities (these expenditures will not be financed from the Company’s Social Benefits Fund but from the applicant’s current funds) and they cannot be regarded as representation costs.
In conclusion, the authority stated that the applicant may recognize expenses for groceries as tax deductible costs, both for persons working under an employment contract and for contractors.
¹Individual interpretation of March 1, 2021, No. 0111-KDIB1-3.4010.24.2020.7.IM
Source: The article was created in collaboration with our cooperation partner TaxaGroup.
If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.
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