Have you already booked a Christmas dinner or are you considering doing so? In either case, it is wise to find out which tax-free deductions are available for your business. Christmas dinners and parties not only provide an opportunity to create a pleasant atmosphere but also to take advantage of business deductions. Here is an overview of the most important tax rules for food, drinks and related expenses at Christmas events, both with your employees and your important clients.
Christmas dinner with Employees
Light refreshments
Christmas dinners with employees follow the rules for internal representation. For internal representation, it is possible to get a cost deduction for light refreshments up to 60 SEK excluding VAT per person per occasion. VAT deductions can also be made in this case.
Examples of light refreshments include non-alcoholic beverages, coffee, tea, snacks, and sandwiches that do not replace a meal.
Food and drinks
Costs for food and drinks are not deductible. However, VAT deductions can be made on the entire cost of food and drinks if it does not exceed 300 SEK excluding VAT per person per occasion. If the bill exceeds 300 SEK excluding VAT, the VAT deduction is calculated proportionally or according to a standard rate. The standard VAT deduction is a maximum of 46 SEK per person per occasion.
Christmas lunch
Keep in mind that a Christmas lunch is not considered representation, so it is counted as a regular lunch and must be taxed as a benefit for the employees.
Christmas dinner with Clients
Hosting a Christmas dinner with clients involves increased complexity regarding deduction rules. To qualify for deductions, the rules for external representation must be followed, meaning a business negotiation or similar activity must take place in connection with the Christmas dinner. If several clients are invited to the dinner, it becomes challenging to prove that a business-related activity actually took place.
If the Christmas dinner meets the requirements for external representation, the deduction rules apply in the same way as for a Christmas dinner with employees. Costs for food and drinks are generally not deductible, but VAT deductions can be made for costs that do not exceed 300 SEK excluding VAT per person.
Christmas parties and related expenses
When it comes to Christmas parties, the deduction rules include not only food and drinks but also any related expenses. Examples of such related expenses can be venue rental, musical entertainment, various performances and other activities. These costs are deductible up to 180 SEK excluding VAT per person.
If the Christmas party takes place in another location with overnight accommodation for the employees, it is possible to make cost deductions for hotels and travel. It is important to note that deductions for staff parties can only be made for a maximum of two occasions per year.
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