A cookie, juice, some exotic fruit and even salty sticks. This is a common set of delicacies in company canteens, which no longer surprises anyone. Nowadays, especially in larger companies, it is becoming a standard for the employer to provide employees with various types of treats or snacks free of charge. And it’s no wonder. On the one hand, it is not a large cost, and on the other hand, it is always welcomed by employees (and more and more often treated as something obvious). And while the issue of the possibility of recognizing such expenses as tax-deductible costs in income tax is no longer debatable, the issue of VAT deduction is not so obvious.
Input VAT
As a rule, the right to reduce the amount of output tax by the amount of input tax is available to the performance of taxable transactions. In other words, the legislator has excluded taxpayers from reducing the amount of output tax by the amount of input tax related to goods and services that are not used to perform taxable transactions.
In the case of food products, such as snacks, administrative courts present approaches that are differentiated into products:
- made available to employees and associates in public areas when not required by labor law;
- made available to employees and associates in public areas when required by labor law;
- made available to employees, associates and contractors during meetings with contractors.
Ad. A
In the case of such products, the authorities consider that there is no right to deduct input VAT on purchases of foodstuffs such as juices, sweets, fruit, yoghurts, made available in public spaces.
The individual interpretations indicate that such purchases serve to meet the personal, private needs of employees, associates and contractors and are unrelated to the business activity.
Thus, there is no right to deduct VAT on their purchase.
Ad. B
The situation is different in the case of foodstuffs such as water, milk, coffee, tea, sugar, mineral water, made available to their employees and co-workers during working hours. The tax authorities consider that these articles are (indirectly) related to the performance of taxable activities and, above all, are intended for consumption in connection with health and safety regulations (which in no way determines their nature related to taxable activities, in the opinion of the authorities).
Thus, you are entitled to deduct VAT on their purchase.
Ad. C
With regard to the purchase of food products listed in both points A and B, given during business meetings, meetings with contractors, the authorities indicate that they are entitled to deduct input VAT on purchases of these products.
It is pointed out that the disclosure of these articles during such meetings is (indirectly) related to the performance of taxable activities.
Thus, one is entitled to deduct VAT on their purchase.
The above position was confirmed in the individual interpretations issued by the Director of the National Tax Information of:
- 2 April 2021 (file reference number 0114-KDIP4-3.4012.2.2021.2.IG);
- 23 March 2021 (file reference number 0112-KDIL1-1.4012.58.2021.2.AW);
- 12 January 2021 (file reference number DOP7.8101.187.2020.FMLM);
- 13 May 2022 (file reference number 0114-KDIP4-2.4012.137.2022.1.MC).
Output VAT
In addition to the issue of input tax on purchased snacks for employees, the output tax should not be forgotten either.
According to Article 7 sec. 2 of the Polish VAT Act, the supply of goods is also understood as the transfer by the taxpayer of goods belonging to his enterprise free of charge, in particular with respect to the transfer or use of goods for personal purposes, e.g. employees.
In the context of the above, in our opinion, the consumption of the food products made available by employees or associates in the course of their professional duties is not consumption for personal purposes. In particular, when it comes to products required by labour law.
As we have also pointed out above, some food products are required on the basis of the Labour Law regulations (§ 112 of the Decree of the Minister of Labour and Social Policy of 26 September 1997 on general occupational health and safety regulations).
With regard to products that are made available free of charge to employees and associates in a publicly accessible space, and are not required under labour law, it should be pointed out that if the taxpayer did not have the right to deduct input tax, the free transfer of these goods will remain tax-neutral (the taxpayer does not have to tax them).
The above conclusions are confirmed, for example, in the individual interpretations issued by the Director of the National Tax Information of:
- 5 August 2019 (file reference number 0112-KDIL4.4012.260.2019.4.HW);
- 29 January 2020 (file reference number 0111-KDIB3-1.4012.697.2019.3.AB).
