What is internal representation? Examples of internal representation according to the Swedish Tax Agency and internal representation that is deductible!
Tax- and the VAT rules around internal representation are often perceived as complicated and difficult to keep track of as these change over the years. Therefore, we help you find out what applies to different types of internal representation and advise you on how you can book internal representation. Here you get an answer to the question what is internal representation according to the Swedish Tax Agency's definition.
Intern representation is a collective term for the overheads a company has for its staff in connection with its operations. Internal representation includes staff expenses for food, for example, Beverage, theater visits and hotel rooms. Also staff expenses incurred at various events such as information meetings and staff parties are usually counted as internal representation.
In addition, some examples of what constitutes deductible internal representation according to the Swedish Tax Agency are reviewed. You can start by reading a little about representation and the amounts that apply to deductible representation the relevant income year to more easily understand the examples of deductible internal representation below!
Internal representation deductible
When is internal representation deductible?? To get to do deduction for internal representation it is required that the expenditure has an immediate connection with the business activity. For a company, this means a cost for deductible internal representation that it may be deducted from the company's taxable results. In practice, this means that when such a cost for deductible internal representation recorded decreases the profit in the company. This in turn means that the tax will be lower for the company in that tax year.
How much deduction may be made for different types of internal representation?
How big a deduction a company can make for different types of internal representation is different for different VAT-liable businesses. If it is a question of a company that runs an activity that does not have the right to a deduction for VAT, the same amounts apply as for a VAT-liable activity, plus the VAT to which the expenditure relates.
In general, the rules regarding internal representation do not differ significantly between the various company forms, limited liability companies, sole proprietorship and trading company. The same basic requirements for internal representation apply, that is to say, the expense needs to have an immediate connection with the business.
Examples of internal representation deductible
When it comes to deductible internal representation, it is the Tax Agency that determines which costs can be deducted and which amounts apply. Here are some examples of internal representation that is deductible according to the Swedish Tax Agency.
Staff Events and information sessions – max 180 SEK plus VAT/person/occasion
The internal representation include, among others. staff parties that also include Christmas tables, Christmas Dinner, Christmas lunch, crab disc and the like. According to the Swedish Tax Agency's general advice, there is a right of deduction for staff parties and information meetings, in principle, regardless of the scope of the business being conducted and regardless of whether the information is aimed at a larger or smaller circle. When it comes to staff parties, however, it must not be a question of social life or hospitality of a personal nature (cf RAW 1981 Aa 119). This means that more lavish company parties generally have such features of personal hospitality that this excludes or reduces the right to deduct. Then it is a question of luxury-oriented internal representation that is not deductible.
Here you can see what deductions can be made in connection with staff parties. Among other things, you can make deductions for food and incidental expenses.
Deductions for food are allowed – deductions for eg lunch, dinner or supper – max 60 SEK plus VAT/person/occasion
Deductions for expenditure on food and drink are only allowed for refreshments and simple consumption, provided that the expenditure amounts to no more than 60 SEK alternatively 60 SEK plus VAT.
Deductions are allowed for peripheral – max 180 SEK plus VAT/person/occasion
For kringkostnader at the office party, t.ex. premises rent and expenses for entertainment (for example musical entertainment or performance) should deductions be allowed with 180 kr/180 SEK plus VAT per person. This means that deductions are allowed with a reasonable amount, but no more 180 kr/180 SEK plus VAT per person. Keep in mind that specially arranged entertainment is considered luxury representation.
Deductions are allowed for max 2 staff meetings / year
Deduction for expenditure on office party should not be granted for more than two staff meetings per year.
Deductions for family members and retired executives allowed
If the employee family or retired executives invited to the office party deductions should be allowed even for the proportion of that expenditure attributable to such persons. In this context, family member means spouse, make, common-law partner or equivalent. Children of any of these who are part of this parent's household are also covered by the term.
Briefings (lunch, dinner or supper)
The internal representation include, among others. information meetings for employees that also include planning meetings, Financial meetings, discussions about purchasing- and sales policy and the like.
• Information sessions for employees, planning meetings, Financial meetings, discussions about purchasing- and sales policies.
Courses, conferences and the like are not internal representation
In-house courses, conferences are not representationsavdragets limitation. The boundary between internal courses, conferences and the internal representation can be difficult to pull.
Planning of the ongoing work is not internal representation
Planning the ongoing work is not internal representation. Meal with colleagues at such times are taxable.
Internal representation lunch and working lunch
This is how you can book internal representation lunches and working lunches
Lunch subsidy
Kick-off and team building
The tax treatment must be assessed case by case. These can both be deductible (can be assessed as an internal representation) och och ej avdragsgilla. The important factors are the
• how the activity posted
• the employer's purpose with the activity
• the benefit to the business
Too lavish arrangement might be considered luxurious representation.
Internal representation board meeting, revision, General Meeting mM.
As a deductible entertainment expense should not count expenses for meals during the board meeting, revision, general meeting or general meeting. Deductions may be allowed for expenditure on snacks with a maximum 60 kr/60 SEK plus VAT per person.
Internal representation alcohol
Internal representation benefit taxation
Book internal representation
Here are examples of how to book internal representation.
Internal representation account
Here are the accounts used for internal representation.
This is how much VAT you can deduct
If you have costs for food and drink in connection with internal representation, you may deduct VAT on a base of no more 300 SEK excluding VAT per person and occasion. This means that you can deduct VAT with a maximum 36 SEK per person if the cost only applies to food and non-alcoholic beverages. This is because the VAT on these goods is 12 percent. 12 percent of 300 kroner is 36 SEK.
If the cost is higher than 300 kronor excluding VAT and applies to both food and alcoholic beverages, should you calculate the deduction through a proportioning based on the actual costs excluding VAT for food and alcohol respectively. In some cases, you can instead choose to make deductions according to a template.
Deductions according to a template
If the meal includes both food and alcoholic beverages, you can make deductions according to a template instead of a calculation based on actual costs. According to the template, you also get a deduction for VAT 46 SEK per person and occasion if the cost is higher than 300 excluding VAT per person. In addition, the VAT must be at a minimum 46 SEK per person and occasion.
Examples of deductions for food and alcoholic beverages
In connection with a business negotiation, a company had total costs for dinner 5 400 kroner for six people. The cost of food is 3700 kroner excluding VAT and the cost of strong beer is 1700 excluding VAT. The company also leaves tips amounting to 370 kr. The restaurant has charged VAT as well 736 SEK (12 percent on 3700 crowns and 25 percent on 1700 SEK). The company operates a taxable business.
Of the total cost excluding VAT refers 64 percent (3700 ÷ 5770) food and 29 percent (1700 ÷ 5770) strong beer. The company has the right to deduct VAT on a basis amounting to 1800 excluding VAT (300 crowns × 6).
Of this amount shall 1154 SEK (64 percent of 1800 SEK) refer to food and 530 SEK (29 percent of 1800 SEK) refer to strong beer. The company therefore has the right to deduct VAT 12 percent on 1154 crowns and 25 percent on 530 SEK, so in total with 229,70 SEK.
If the company instead chooses to make deductions according to a template, the deduction will be 288 SEK (46 crowns × 6).
The easiest is to use the Swedish Tax Agency calculation spin and then the following result is obtained for the above example. The deduction for VAT has been calculated based on the actual costs as above.
The input VAT you can deduct in the VAT return is shown here. VAT to be deducted: 284,24 SEK