Representation

Enterprises are entitled to deductions for expenses for basic entertainment (food and drink) for their customers or business associates.

Does this apply to me?

This applies to you if you run a business and have expenses for basic entertainment (representation).

What you need to do

  • consider whether the business is entitled to a deduction for the expenses
  • enter the expenses into the accounts
  • keep documents showing the expenses you’re claiming a deduction for

Conditions for deductions

Representation includes, for example, visits from business associates, public authorities, journalists, or various groups for guided tours.

You cannot claim a deduction for other expenses related to representation.

  • travels to sports events
  • hunting and fishing trips
  • gifts to business associates
  • maintenance of buildings, boats, or cars in connection with representation

Enterprises are entitled to deductions for expenses for basic entertainment (food and drink) for their customers or business associates if:

  • the expense is related to the business
  • the entertainment takes place during working hours or in connection with negotiations or product demonstrations
  • the entertainment takes place on the business premises, or, if applicable, at an eating place nearby
  • no spirits are served
  • the expenses for the entertainment at the eating place are within the maximum amount per person

If these conditions are met, the business may also claim deductions for expenses for any participating owners, employees, and members of the board.

The company arranges a dinner for their business associates in the evening. Some employees also participate. The company is not open in the evening. Since the entertainment takes place outside of working hours, the business is not entitled to deductions for the expenses.

The company has expenses for basic entertainment for some customers during working hours. Beer and wine are served with the food. The expenses for the entertainment are less than the maximum amount per customer. The company has no serving option at their premises, therefore they use an eating place nearby. The business is entitled to deductions for the expenses.

The company has expenses for basic entertainment for some customers during working hours. Beer and wine are served with the food. The entertainment takes place at an eating place in the vicinity of the business premises. The expenses for the entertainment are higher than the maximum amount per customer. The business is not entitled for a deduction for any of the representation expenses. The entire deduction entitlement is forfeited.

Borderline cases

There may be borderline cases where the expenses are considered to be advertising or welfare measures, not representation.

Information if you

Businesses selling goods that cannot be transported to potential customers can bring brochures or similar to present their product. The business can then claim a deduction for expenses for basic entertainment.

 

The business can claim a deduction for expenses for beer or wine with the food. If spirits are served, the busines forfeits the deduction entitlement for the entire entertainment.

Supporting documentation

You do not need to send us any documentation, but you must be able to present supporting documents for any expenses that you claim deductions for if we ask you to.