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Holidays in the Company and VAT

Welcome to the holiday season!

As every year, we come to you with current information regarding taxes and VAT, particularly in the context of holiday expenses and benefits. The pre-holiday period is a time of intensive preparations, including purchases, organizing company events, and giving gifts. However, it is worth remembering that these activities may have tax consequences, especially with regard to VAT.

Purchases of Holiday Decorations
If the company performs taxable activities, VAT can be deducted from purchases related to decorating the office for the holidays. However, it is worth remembering that such expenses must be strictly related to business activity.

Holiday Parties for Employees and Contractors
Organizing holiday gatherings carries various tax consequences:

  • Employees and contractors: VAT can be deducted from purchases related to organizing the event, provided that the company conducts taxable activities. However, this does not apply to the purchase of catering services, alcohol, or accommodation.
  • Former employees (retirees): In this case, VAT deduction is not possible, as tax authorities consider such expenses unrelated to business activity.

Holiday Gifts

  • Gifts for employees: VAT on such purchases is not deductible, but VAT does not need to be charged on the transfer of these gifts either.
  • Gifts for contractors: VAT can be deducted from purchases, including alcohol, if the gifts are related to taxable activities. VAT must be charged on the transfer, unless the gifts fall into the category of “low-value gifts” (e.g., their value does not exceed 100 PLN excluding VAT when the identity of the recipient is recorded).

Prepaid Cards and Vouchers
The transfer of prepaid cards or vouchers to employees or associates is not subject to VAT. The same applies to electronic vouchers.

Holiday Cards and Calendars with Company Logo

  • Holiday cards: VAT can be deducted from their purchase, but the transfer of cards is not subject to taxation, as they have no utility value.
  • Calendars with company logo: VAT deduction is possible if the calendars meet the definition of “low-value gifts.”

Charity

  • Cash: Transferring it for charitable purposes is not subject to VAT.
  • Goods: If the taxpayer deducted VAT from their purchase, the transfer of such donations is subject to taxation.

Holiday expenses in the company can be not only an opportunity to build relationships with employees and contractors, but also a tax challenge. Therefore, it is worth making sure now that all activities comply with regulations to avoid problems during settlements. If you need help with properly recording holiday expenses—contact us. We will ensure that your settlements are as peaceful as the holidays themselves!

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