NAV: from February 1, businesses can deduct representation expenses tax-free under certain conditions

However, there are some basic rules when calculating tax exemption – the office warns. Only hospitality for representation purposes in restaurants and pastry shops can be accounted for at a discount, such as a business lunch or dinner after negotiations, but a birthday greeting to a colleague can no longer be included here. Not all food and beverage services consumed in catering units are tax-free, only in restaurants or pastry shops that are listed in the National Trade Register. An important condition is that the exemption applies only to consumption on the premises, not to other invoiced services – the announcement stated.

The tax exemption also has an annual upper limit, one percent of the company’s annual revenue, up to a maximum of 100 million forints per year. If the value of the representation services exceeds this limit, “a quarterly advance must be paid for the excess part and the payer is responsible for annual accounting” – the announcement stated. In order to ensure that the conditions are met and can be checked at any time, businesses must continue to keep records of entertainment allowances, the office added.

The National Tax and Customs Administration has published a practical guide on the detailed rules in the form of questions and answers on its website. It is worth informing yourself about the discount before settling the accounts, the NAV statement reads.