Entertainment expenses: can alcohol be taken into account?

Well-established partnerships are important for any company. They will not become like this on their own; working on them is an important part of the enterprise’s management strategy. During the negotiations, meetings of representatives, meetings, and receptions take place. The costs of these activities constitute a serious expense item.

Tax authorities are very attentive to checking this type of expense, so it is worth carefully monitoring their accounting and documenting it correctly.

Let's figure out which expenses can be attributed to this type of expense and which cannot be written off to this account, what documents can serve as confirmation and how to correctly reflect this item in accounting and tax accounting. Let’s also consider current legislative changes regarding hospitality expenses and trends for the near future.

Entertainment expenses: what the law says

Representation expenses (PR) is a term from the Tax Code. Their standards are given in paragraphs. 22 clause 1 and clause 2 art. 264 Tax Code of the Russian Federation. The definition of entertainment expenses is given based on these standards. Representative expenses will be considered expenses for official reception, support and services for authorized persons of other companies, as well as those who intend to attend a meeting of the board of directors, board or other governing bodies.

Are entertainment expenses considered expenses related to production and sales ?

Factors not relevant for determining OL

1. Location. It does not matter where exactly the reception is organized: on the premises of the company or in a bar or restaurant. Exceptions are entertainment establishments of other formats - PR does not apply to them.
2. Time spending. Whether business hours, evenings, or a weekend are chosen for the date of the event, the expenses still remain representative.
3. Participants status. Counterparty participants include both individuals and officials; they can be not only representatives of the management of other companies, but also clients.
4. Result of the meeting. The outcome of the entertainment event does not matter either. Whether a positive decision on cooperation was made, contracts were concluded, or the participants left with nothing, the funds for the event were spent and can be recognized.
5. The number of participants also does not determine hospitality expenses. This factor can only affect the amount of spending, but if it does not exceed the established norm, this indicator does not matter.

Expenses that can and cannot be considered representative

The Tax Code of the Russian Federation identifies special categories of expenses that, from a taxation point of view, can be legitimately considered representative expenses. These include the following expenses:

1. Payment for organizing an official event to receive guests from other companies. Such an event could be:
   breakfast;
2. dinner;
3. off-site meeting.

NOTE! Food and alcohol costs are also included in this cost group.

4. Buffet service accompanying said reception event.
5. Transfer of participants to the reception site and back.
6. Remuneration for the work of a freelance translator, if he was invited to attend the event.

ATTENTION! If the organization has its own translator, the tax authorities may not consider the costs of an invited specialist to be representative. A company can try to prove its case in court by convincing it that the qualifications or specifications of in-house translators do not meet the objectives of the entertainment event.

According to the Federal Tax Service, the list of entertainment expenses is closed and cannot be expanded.

It is unlawful to count as entertainment expenses:

• provision of rest and food in sanatoriums, boarding houses, and other entertainment establishments (except for restaurants and bars);
• funds for an entertainment program for participants;
• cost of excursions;
• money for flowers for guests, memorable souvenirs, etc.;
• finances for decorating the hall for the event;
• medical expenses, if required;
• travel and accommodation of guests;
• payment for visa services for participants;
• spending on corporate events (New Year, March 8, anniversaries, etc.);
• any financial interaction with the management of structural divisions and branches of your own company (representation expenses - by default only for “outsiders”).

Criteria for classifying expenses as entertainment expenses

The concept of “official reception and service”, through which the Tax Code defines entertainment expenses, in turn, does not have an unambiguous interpretation in legislative documents. Therefore, they can be interpreted with an expansive meaning. Because of this, situations often arise when, formally and in fact, expenses may turn out to be representative expenses, but in the legislative sense, the tax authorities think otherwise.

To avoid disputes with tax authorities, which can only be resolved in arbitration court, it is recommended when determining expenses to use the criteria outlined in the Tax Code and regulations of the Ministry of Finance of the Russian Federation (in particular, Order of the Ministry of Finance of the Russian Federation dated March 15, 2000 No. 26n):

1. Reception and service must be arranged for the purpose of establishing or maintaining cooperation for the mutual benefit of the parties.
2. Events must be strictly official (for example, a banquet in a restaurant, even if it is held with partners, will not be considered official, unlike a business breakfast or lunch). The formality of the event can be confirmed by the program of issues to be discussed during the event.
3. Costs must be justified, that is, justified from an economic point of view.
4. Each expense item must have documentary evidence.

In controversial cases, you should turn to arbitration practice. In court, expenses that meet one of two conditions will be considered representative:

• directly named as such in the relevant paragraph of the Tax Code of the Russian Federation;
• they are allowed to be included in representative ones by separate regulations of the tax service or the Ministry of Finance of the Russian Federation.

Has the declaration been cancelled?

Instead of innovations, in order to facilitate the accounting work of organizations, the legislator abolished the submission of an alcohol declaration. However, this decision did not affect everyone. An alcohol declaration is submitted in the following cases:

• retail sales of beer, cider, mead;
• inability to use the Internet to record alcohol;
• the presence of a small beer production (up to 300,000 decalitres per year);
• alcohol sales on planes;
• purchases of alcohol products as raw materials;
• transportation of bulk alcohol;
• temporary storage of alcohol.

(see Federal Law 278, Art. 1-11).

Based on the above, it follows that the declaration under f. 11 is not served if:

• the organization has access to the Internet, it uses EGAIS;
• the organization does not belong to catering;
• The organization sells strong drinks at retail.

Form 12 is submitted according to the old rules: all organizations that sell beer and similar drinks are required to provide reporting. The declaration deadline is no later than the 20th day of the month after the reporting quarter.

Documents to confirm hospitality expenses

IMPORTANT! A sample estimate of entertainment expenses from ConsultantPlus is available here

Despite the legal requirement for documentary evidence of entertainment expenses, no single standard or list of such documents has been developed. We can say that the presence of official papers is mandatory, but their form is not unified. This issue is resolved by the accounting policies of the organization itself.

Such acts may include:

• the director's order to hold a representation event - be sure to indicate the purpose, date, time and place of organizing the reception, list the counterparties taking part, and also provide the names of responsible and controlling persons;
• the program of the future event will not be valid without an order; in it, the main stages of the representative meeting must be tied to specific dates and times;
• estimate of the event - a list of expenses for specific items (transport, catering, etc.), it is better to create it for each stage separately, be sure to approve it with management;
• report on the event - compiled by the responsible person specified in the order, it reflects all the same positions as in the order, plus the specific result achieved at each stage (especially if during the event any official agreements were concluded or documents were signed);
• an act for writing off this type of expense - contains information about the exact amount for all types of entertainment expenses (this document must be certified not only by the manager, but also by the chief accountant);
• payment documents that confirm expenses : checks, invoices, certificates of work performed, etc.

FOR INFORMATION! In the event of a dispute being considered in an arbitration court, priority will be given to organizations that have taken care of both preliminary supporting documents (order, estimate, program) and final ones (report, act).

Which accountable documents will not cause complaints from tax authorities?

The article from the magazine “MAIN BOOK” is relevant as of October 5, 2012. Experts from the L.A. Group of Companies answered the questions.

Elina, N.A. Martynyuk, E.A. Sharonova

You can read the full version of the discussion: On September 28, experts from our publishing house held an online conference “Accounting and cash expenses.” From the questions asked, it is clear that accountants are interested in both “evergreen” topics (in particular, the attitude of tax authorities to the issuance of excess revenue for reporting) and specific ones (for example, drawing up advance reports when paying for tickets for business travelers using the director’s personal card). We bring to your attention answers to the most interesting questions from conference participants.

Member victor314 It often happens that at the end of the day, when collection has already taken place, the cash register limit is exceeded.

The bank is reluctant to raise the limit. Since there is no one to hand over the money, we give it to the director for reporting, and in the morning he allegedly deposits it back.

How do tax authorities treat such transactions?

: From the beginning of this year, you do not need a bank decision to increase your limit.

Now you set the limit for yourself according to a formula determined by the Central Bank.

This formula allows you to set a limit based on the highest daily earnings you've ever had. And if it increases, change the limit as often as necessary - at least every day. Learn more about how to install

Rationing of entertainment expenses

The law does not allow spending uncontrolled amounts for entertainment purposes, then writing them off, thereby reducing the income tax base. A strict limit has been established for this type of expense. It is prohibited to spend more than 4% of the wage fund for a given reporting period as representative funds (clause 2 of Article 264 of the Tax Code of the Russian Federation).

As labor costs increase over time, the ceiling on hospitality expenses also increases. If, for example, in the 1st quarter there were no entertainment events or the money spent on them was less than normal, then in the remaining quarters it will be possible to “freeze” and take into account more funds for this item. Naturally, we are talking only about the results of the current year.

How to prepare an advance report for entertainment expenses ?

You can calculate the required amount of restrictions on entertainment expenses in one of 3 ways.

Method 1 – quarterly. When filling out an income tax return at the end of each quarter, entertainment expenses are taken into account, taking into account the wage fund for that quarter. This method is more convenient for companies with a cash method of determining income and expenses. If entertainment expenses exceed a quarter, a deferred tax liability is formed, which can be reversed at the end of the year.

Method 2 – annual. Firms' annual budgets are usually not very different. This allows you, when planning the next year, to immediately allocate approximately 4% of last year’s wage fund to entertainment expenses, and then divide this amount into quarters. There will be no non-standard costs with this method, but you will have to constantly adjust the planned and actual indicators.

Method 3 – official. The company establishes which officials can be responsible for entertainment events and what maximum amounts they can spend on this. It is important that expenses are made exclusively for the stated purposes. A check will be required to ensure compliance with the 4% limit.

Advance report: what documents to collect and submit to the accountant

— Accountable persons do not always bring to the accounting department an ideal package of supporting documents for the amounts spent by them.

In it you will see links to regulatory legal acts - this is for your convenience. It is not necessary to duplicate them in your version of the instructions. Approved by Order No. 4 dated January 11, 2012 1.

Hence the problems with income tax purposes and the use of VAT deductions. To minimize errors, it is better to arm accountants with written instructions on what documents need to be collected when purchasing goods (works, services) or other accountable expenses and how these documents should be drawn up.

We warn the employee If the employee does not report on accountable amounts on time, then within a month they can be withheld from his salary by order of the manager (Article 137 of the Labor Code of the Russian Federation).

To receive, the employee must write an application, have it endorsed by the manager, and then bring it to the accounting department (Clause 4.4 of the Regulations, approved.

We recommend reading: How long does it take to get your money back on a claim?

Central Bank of the Russian Federation 10/12/2011 N 373-P). For example, it might look like this. Here is a ready-made sample of instructions. In it you will see links to regulatory legal acts - this is for your convenience.

It is not necessary to duplicate them in your version of the instructions.

The period for which cash is issued is set by you yourself (Article 22 of the Labor Code of the Russian Federation; clause 4.4 of the Regulations, approved by the Central Bank of the Russian Federation on October 12, 2011 N 373-P). There are no restrictions in the legislation. This could be 1 day, a month or a longer period

1.3.

You can receive money on account only if you fully repay (debt) the previously received advance. 1.4. If there is no cash in the cash register, employees with permission

How to reflect in accounting the purchase of goods (work, services) through an accountable entity

1. 3.
2. 4.
3. 6.
4. 7.
5. 2.
6. 1.
7. 5.
8. 8.

An employee whose authority is confirmed by a power of attorney can receive purchased goods or accept work or services. It can be written out using standardized forms No. M-2 or No. M-2a.

They were approved by Resolution No. 71a of the State Statistics Committee of Russia dated October 30, 1997. The forms of these powers of attorney are essentially the same, the only difference is that form No. M-2 has a spine.

It is needed to record powers of attorney in the registration journal. Whether to keep such a journal or not is up to everyone to decide for themselves.

If you don’t, then it’s easier to use form No. M-2a. Situation: is it possible to issue an M-2 power of attorney to a citizen who is not an employee of the organization? Answer: yes, it is possible. Instructions approved by Resolution of the State Statistics Committee of Russia dated October 30, 1997 No. 71a stipulate that a power of attorney in form No. M-2 can be issued only to employees of the organization.

However, the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated August 13, 1996 No. 1792/96 states: from the moment the first part of the Civil Code of the Russian Federation came into force (from January 1, 1995), powers of attorney on behalf of a legal entity are drawn up taking into account the requirements of Article 185 of the Civil Code of the Russian Federation. This provision allows for the right to issue a power of attorney to any person, and not just an employee (clause

1 tbsp. 185 of the Civil Code of the Russian Federation). In addition, there is no prohibition on issuing cash on account to a person working under a civil contract. And the accountant needs a power of attorney to receive goods and materials. Thus, a valid

The role of entertainment expenses in the income tax base

Entertainment expenses are deducted from the amounts that make up the net profit of the enterprise, thereby reducing the tax base. In this case, input VAT is also deducted. If in subsequent reporting periods expenses fall within the 4 percent limit, VAT on them can also be deducted.

It is for this reason that “spears are broken” regarding the recognition or non-recognition of various expenses as entertainment expenses. Even if the organization of the event actually required costs that are not included in entertainment expenses by the Tax Code, they cannot be included in these costs to reduce the tax base.

Is it possible to take into account for income tax purposes the costs of purchasing alcoholic beverages for organizing an official reception? View answer

FOR EXAMPLE. Kassandra LLC organized a meeting with representatives of other organizations to discuss the terms of cooperation. 140 thousand rubles were spent on this event. Of these funds, 70 thousand rubles were spent on the reception and lunch, 25 thousand rubles on buffet service, 20 thousand rubles on transportation of participants to the lunch place and back to the company, 10 thousand rubles on attending a performance in the theater. . rub., for a tour of memorable places of the city - 15 thousand rubles, for flowers and souvenirs for participants - 45 thousand rubles.

In this case, only 115 thousand rubles can be written off for hospitality expenses, that is, the amount of expenses for reception, catering and transport. The remaining funds are in the amount of 25 thousand rubles. must be paid from net profit after calculating the tax amount.

NOTE! Entertainment expenses are deductible only for taxpayers using the general taxation system. In Art. 346.16 of the Tax Code of the Russian Federation provides a list of expenses by which a payer working under the simplified tax system can reduce the base - entertainment expenses are not included in this list. Entrepreneurs who rely on preferential tax systems can use only funds from net profit (the difference between income and expenses) for entertainment expenses.

Main

1. Since July 1, 2018, unit accounting of alcohol has been in effect in Russia.
2. Violations are subject to large fines in accordance with the Civil Code of the Russian Federation.
3. Participants in the alcohol market, in particular, traders of strong alcohol, are exempt from the obligation to provide a declaration under f. eleven.
4. The obligation to provide “beer” reporting under form 12 remains.
5. Accounting for alcohol is carried out according to the rules for accounting for inventories, finished products, trade operations, using the appropriate accounts and their correspondence.