Business trip of an entrepreneur and taxes

Service-Tax

An entrepreneur's business trip is not defined in the Labor Code. However, the fact of holding it is related to the conducted business activity. Thus, the costs incurred during the training may be settled in it, but the regulations contain certain limitations in this respect.

An entrepreneur's business trip and the Labor Code

The provisions of tax acts do not define the concept of a business trip. It was defined in art. 775 § 1 of the Labor Code. A business trip is each departure of the employee, at the request of the employer, outside the place where the employer is located or outside the permanent place of work, in order to perform a business task. Entrepreneurs traveling in order to settle the company's affairs do not travel within the meaning of the provisions of the Labor Code.

Is the entrepreneur's business trip a tax expense?

The basic condition for including business travel expenses as tax deductible costs is that it takes place in order to generate income, or possibly to protect or secure the source of income. Only then may the business trip and related expenses constitute a tax expense. In addition, the expense cannot be included in the catalog of expenses that are not deducted from tax deductible costs.

Undoubtedly, travel expenses related to the company's operations meet the indicated criteria. Basically, all business trips - both for employees and entrepreneurs - are related to earning income. They are undertaken in order to carry out official tasks, and this, in turn, can be attributed to an intention, an intention to undertake them in order to obtain income by the company. Therefore, as a rule, expenses incurred on a business trip are tax-deductible.

However, you should remember about the catalog of expenses that are not considered costs and so pursuant to Art. 23 sec. 1 point 52 of the PIT Act is not considered to be tax deductible costs of the value of the allowances for business trips of business persons and persons cooperating with them - in the part exceeding the amount of allowances due to employees, specified in separate regulations issued by the competent minister.

An entrepreneur's business trip is only a trip related to this activity and is aimed at generating income or securing a source of income. It is not necessary to achieve a specific income, it is enough to prove that the trips were related to business activity.

Thus, an entrepreneur (company owner) who incurs expenses resulting from his business trips may include the actually incurred and properly documented expenses related to the trip as tax deductible costs.

Entrepreneur's diets

The purpose of the diet is to cover the increased costs of food in connection with a business trip in the country.

For business trips, the owner of the company is entitled to diets on the same terms and in the same amount as the employees.

The tax authorities have repeatedly commented on the possibility of including the allowances due to entrepreneurs as costs of business trips made by them and their associates. In a letter of February 21, 2007, no. UA I-1 / 415-3 / 2007 / RB, the Head of the Second Tax Office in Łódź-Górna stated that:

(...) In relation to persons running a business, in the scope of allowances due for business trips, legal regulations adopted for employees should be applied, as evidenced by the provisions of Art. 23 sec. 2 point 52 of the Personal Income Tax Act.

As it results from the facts presented in the application, employees employed in your company perform official tasks outside the city where the company's headquarters is located, and therefore, taking into account the above-mentioned regulations, the local Tax Authority shares your opinion that you have the right to include in the costs of obtaining income of the value of allowances for business trips paid to you as the owner up to the limit specified in the above-mentioned ordinances of the Minister of Labor and Social Policy of December 19, 2002 (...).

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VAT deduction

Pursuant to the basic provision on VAT deduction (Article 86 (1) of the VAT Act), to the extent that goods and services are used to perform taxable activities, the taxpayer has the right to deduct VAT.

The right to deduct VAT also applies when the relationship is indirect. The expenses incurred on business trips of the entrepreneur are related to the overall operation of the enterprise, the activity of which is subject to VAT, and therefore entitle to VAT deduction.

At the same time, it is worth adding that restrictions on VAT deductions are regulated in Art. 88 of the Act. Under the above-mentioned the provision of reducing the amount or refunding the difference in output tax does not apply, inter alia, to accommodation and catering services purchased by the taxpayer, except in the case of the purchase of ready meals intended for passengers by taxpayers providing passenger transport services.

The inability to deduct VAT in the case of catering and hotel services was confirmed by the Head of the Tax Office in Pabianice in a letter of 27 July 2006 (No. USIIIVAT / 443 / I / 65/2006 / RR), where we can read:
(...) In the company's opinion, the tax charged on invoices documenting the above purchases is deductible as it is related to the conducted business activity. Inviting a contractor to a snack in a restaurant is related to conducting business talks, is to strengthen the opinion about the company's reliability and create a positive image. Contacts outside the company's premises are the norm in the current economic reality and have a large impact on the perception of the company by potential and current business partners.

(...) The presented facts show that the company runs a business in the field of production and operation of computer devices, therefore it is not entitled to deduct input tax in the case of purchasing catering and accommodation services (...).