VAT and Employee Entertainment – i.e. where only company staff members are present

If you provide entertainment to reward your team for good work or to maintain and improve staff morale, this is considered to be for business purposes and so you can claim back the VAT. Examples could include staff parties, team building exercises, staff outings and similar events. It will usually involve the supply of food and drink provided by the company, for which staff members are not charged.

However, you cannot claim back the VAT in either of circumstances:

  • When non-employees are included in the event (this is business entertainment, not employee entertainment).
  • When the entertainment is provided only to directors or partners of the business.

Where directors and partners attend staff parties together with other employee, you can claim the VAT back.

AdviceRaminta Salkauskiene