Costs of meals, which are not considered taxable wages, are limitedly deductible from profits.
Limited deductible expenses
For income and corporate tax purposes, limited business expenses for:
- food, drink and stimulants;
- representation (including receptions, festive gatherings and entertainment);
- conferences, seminars, symposia, excursions, study tours and the like.
For income tax purposes, €5,100 of these costs are not deductible. If it is less, the entrepreneur can also choose not to deduct 20% of the actual costs in the tax return.
For corporation tax purposes, of these costs, €5,100 is not deductible, or 0.4% of the total wage bill, whichever is higher. The entrepreneur can choose not to deduct 26.5% of the actual costs.
Meals
Obviously, the cost of meals falls under the category of “food, beverages and stimulants”. However, when meals are taxed with payroll tax, they are (fully deductible) labour costs and not (limited deductible) food, beverage and entertainment costs.
In a case in which Hof ‘s-Hertogenbosch ruled early this year involves a supermarket entrepreneur providing meals and refreshments consumed at the workplace to employees. These benefits in kind will qualify as more than incidental business meals for wage tax purposes, making the reimbursement and provision specifically exempt for wage tax purposes.
The court confirmed that the costs associated with the meals were covered by the deduction limitation because no payroll tax was paid on the meals.