Entrepreneurs are NOT allowed to deduct VAT on catering expenses. Recently, the State Secretary nevertheless approved deduction in certain cases. However, this is subject to conditions.
Hospitality spending
Not deductible is VAT charged to a business in respect of:
- providing food and beverages;
- for on-site use;
- within the scope of the hotel, café, restaurant, boarding house and related business;
- to persons staying there for only a short time.
This VAT is also NOT deductible when the drinks, meals and the like enjoyed are exclusively business in nature. You will find this deduction prohibition in Article 15(5) of the Turnover Tax Act 1968.
Example
An entrepreneur who provides courses that also include lunch. The entrepreneur buys this lunch from the meeting venue operator. The lunch is consumed in the restaurant of the meeting venue. This entrepreneur may not deduct the VAT charged on the purchase of the lunch.
Passed on
The Secretary of State's approval is articulated in a decision. VAT on catering expenses is WELL deductible if the entrepreneur:
- the performance does not decrease as an end-user;
- but performs the same service and passes it on to a third party;
- and must charge VAT in this regard.
To the approval, the condition linked that the invoice states that the supply is (partly) a supply of food and beverages, so that it is clear that the customer is not entitled to deduct VAT (unless the customer can apply the approval himself).
It is not entirely clear whether the amount of the catering expenses must be shown on the invoice (but it is obvious). It is also not clear whether it is permissible for the amount recharged to be less than the amount for which the food and beverages were purchased.
The approval is laid down in the aforementioned decree in anticipation of a legislative amendment. Perhaps some more clarity will be provided when the law is enshrined.