Carry out entertainment expenses. Representation expenses in accounting - basic postings. What documents are required to confirm hospitality expenses?

The peculiarities of reflecting entertainment expenses in accounting are that they are not always taken into account in full in the calculation of the income tax base. There is a limit for them, tied to the amount of labor costs for the enterprise. Rationing is carried out separately for each tax period.

Entertainment expenses – what are these expenses?

The list of costs that can be shown in accounting transactions as entertainment costs is given in paragraph 2 of Art. 264 Tax Code of the Russian Federation. The law stipulates that in order to be accepted for accounting, these costs must be economically justified and documented. The purpose of such expenses is to organize official meetings with business partners to develop joint projects, increase sales and create conditions for profit growth.

What is included in hospitality expenses:

• payment of bills related to the preparation of official receptions and negotiations with the participation of business partners from other companies;
• expenses incurred in connection with holding meetings of the board of directors.

Expenses for breakfast, lunch or other official events can be counted as entertainment expenses. The expenses for transfer of persons participating in negotiations, buffet service and payment for the services of third-party translators for the period of negotiations or meetings may be recognized as hospitality expenses.

What are the organization's entertainment expenses? These are costs that are caused by current official events, the need for which is related to the implementation of measures to increase profits. Entertainment expenses and payment of bills from medical and sanatorium institutions cannot be included in this type of cost. Rest of officials and medical procedures cannot be recognized as official events.

The letter of the Ministry of Finance dated March 25, 2010, No. 03-03-06/1/176 states that the purchase of prizes, certificates and diplomas, and hall decoration services are not justified entertainment expenses. Amounts spent on souvenirs cannot be included among them (this position is explained in the Letter issued by the Ministry of Finance on August 16, 2006 under No. 03-03-04/4/136).

Estimate of entertainment expenses

One of the documents justifying entertainment expenses can be an estimate of upcoming expenses. It does not have a legally regulated template. The form can be compiled independently and include the following blocks:

• place for the document to be endorsed by the director;
• information about the date of execution of the estimate;
• information about the time of the official event, the proposed meeting place;
• the projected number of negotiating groups, indicating the status of each participant (who represents whose interests);
• cost items with approximate amounts for them;
• the total amount of expected expenses;
• information about the responsible person who performed the task of drawing up estimate documentation, fields for signatures and seals.

Income tax: entertainment expenses

Costs recognized as representative expenses can be used to reduce the income tax base. For this purpose, the amount within the calculated limit is taken into account (more about rationing). The limit is fixed at 4% of the costs associated with remuneration of personnel in the reporting period. The standardized indicator is calculated based on the results of each reporting period during the year, cumulatively.

In the 1st quarter, the accountant carried out entertainment expenses in the amount of 105,000 rubles, in the 2nd quarter - 20,050 rubles, in the 3rd and 4th quarters there were no official meetings or negotiations. The company's personnel costs were at the following level:

• in the 1st quarter – 750,250 rubles;
• in the 2nd quarter – 802,135 rubles;
• in the 3rd quarter – 564,250 rubles;
• in the 4th quarter – 1,020,540 rubles.

To calculate income tax at the end of the year, an accountant can offset 125,487 rubles ((750,250 + 802,135 + 564,250 + 1,020,540) x 4%). The total amount of entertainment expenses for the tax period was 125,050 rubles (105,000 + 20,050). In calculating the tax base, you can include the entire amount of costs incurred for organizing negotiations and official receptions, since their amount is within the limit for the reporting year (the limit is 125,487 rubles, which is 437 rubles more than the actual costs).

At the end of the year, the enterprise's income amounted to 11,210,590 rubles (including VAT of 1,710,090 rubles), expenses by group are equal to:

• production costs – 3,507,000 rubles;
• for wages – 3,137,175 rubles;
• depreciation charges – 850,044 rubles;
• representation costs – 125,050 rubles.

The tax base will be 1,881,231 rubles. ((11,210,590 – 1,710,090) – 3,507,000 – 3,137,175 – 850,044 – 125,050). The final amount of the annual income tax is 376,246 rubles. (1,881,231 x 20%).

Collection of representation expenses in arbitration court

Regulatory authorities insist that entertainment expenses can be recognized in tax accounting only if the meeting was held in a place intended for business negotiations and not entertainment. Judicial authorities allow such controversial expenses to be included in the tax base if the taxpayer can document the validity of the expenses. For example, the Resolution of the Federal Antimonopoly Service of the Moscow Region dated 09/03/2013 under No. A40-22927/12-107-106 established that the use of a ship as a place of negotiations is justified, and rental costs can be counted as entertainment costs.

The possibility of recognizing the cost of alcohol purchased for a meeting as part of the representative type of expenses is evidenced by the content of the resolution dated January 15, 2013, No. A55-14189/2012 (FAS PO).

Organizing a meeting with representatives of your branches and subsidiaries cannot be considered a representative type of spending. The position of the regulatory authorities on this issue is confirmed by judicial practice (Resolution of the FAS VSO, dated 08/11/2006 No. A33-26560/04-SZ-F02-3935/06-S1).

Representation expenses in tax accounting need to be normalized. The maximum amount that an organization can recognize when calculating profit is 4 percent of the total amount of its labor costs for the corresponding reporting or tax period (paragraph 3, paragraph 2, article 264 of the Tax Code of the Russian Federation). Representative expenses include expenses (paragraph 1, paragraph 2, article 264 of the Tax Code of the Russian Federation):

- to hold an official reception - breakfast, lunch or other similar event for representatives of organizations and officials of the host company participating in the negotiations;

— transport services for these persons, that is, for their delivery to the venue of the entertainment event and back;

— buffet service during negotiations;

— payment for the services of translators who are not on staff of the organization.

In addition, similar expenses for receiving and servicing participants who arrived at meetings of the board of directors, board or other governing body of the organization (clause 2 of Article 264 of the Tax Code of the Russian Federation) can be taken into account. Let's consider when tax accounting for entertainment expenses causes disputes with inspectors.

Conducting a meeting with a client - an individual

Writing off the costs of such an event is risky. Despite the fact that this is not an error, it is possible that tax authorities will exclude these expenses during the audit. The fact is that paragraph 2 of Article 264 of the Tax Code of the Russian Federation deals with the costs of receiving and servicing only representatives of other organizations. Neither partners who are individual entrepreneurs nor clients - individuals are mentioned in this paragraph. Formally, it turns out that the costs of negotiations with these persons cannot be taken into account when calculating income tax.

However, the Russian Ministry of Finance has repeatedly indicated that representative expenses may also include expenses for negotiations with individuals - clients of the organization (for example, letters dated 05.27.09 No. 03-03-06/1/351 and dated 03.27.09 No. 03-03- 06/2/64). After all, it is also necessary to establish and maintain business relationships with them, which is no less difficult than with legal entities.

Business meeting with officials of your own branch

The courts note that the costs associated with the reception of employees of branches and separate divisions of the organization, although they arrived at the head office to resolve production issues, are not representative. After all, these include exclusively expenses for official reception or service of representatives of other organizations or participants who arrived at meetings of the board of directors, board or other governing body of the company (Clause 2 of Article 264 of the Tax Code of the Russian Federation).

In this regard, the courts come to the conclusion that the costs of negotiations with representatives of their own branches are not taken into account when calculating income tax (Resolution of the Federal Antimonopoly Service of the East Siberian District dated August 11, 2006 No. A33-26560/04-S3-F02-3935/ 06-S1, A33-26560/04-S3-F02-4272/06-S1). Nevertheless, if there are supporting documents and connections with the organization’s activities aimed at generating income, it seems possible to recognize disputed expenses in tax accounting, for example, on the basis of subparagraph 49 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation as part of other justified expenses.

Negotiations with a potential counterparty if the contract has not been concluded

Accounting for expenses in this case is not a mistake. The Tax Code states that representative expenses include expenses for the official reception and service of negotiation participants, the purpose of which may be not only to maintain mutual cooperation, but also to establish contacts (subclause 22, clause 1 and clause 2, article 264 of the Tax Code of the Russian Federation). At the same time, the possibility of tax accounting for entertainment expenses in this case does not depend on the results of the business meeting.

The courts adhere to a similar point of view (resolution of the Federal Antimonopoly Service of the Central District dated August 27, 2009 No. A48-2871/08-18). Arbitrators most often note that contracts or agreements signed as a result of negotiations do not relate to primary documents and their presence is not a prerequisite for confirming the actual representation expenses incurred. This means that tax authorities do not have the right to demand such documents as evidence of these costs.

Tickets to a concert, theater or museum for persons participating in the negotiations

Expenses for organizing entertainment and recreation, in particular the cost of tickets to theaters, museums, cinemas, concerts, excursions and other entertainment events, do not apply to entertainment (paragraph 2, paragraph 2, article 264 of the Tax Code of the Russian Federation).

Therefore, such costs do not reduce taxable profit. The Russian Ministry of Finance also notes that expenses for a buffet reception, performances by artists, and organization of a boat trip as part of an entertainment program organized after the official part are not taken into account when calculating income tax ().

Hotel payment for out-of-town or foreign business partners

According to the Russian Ministry of Finance, accommodation costs for guests arriving for an official meeting are not taken into account when calculating income tax. After all, this type of entertainment expenses is not mentioned in paragraph 2 of Article 264 of the Tax Code of the Russian Federation (letter dated 12/01/11 No. 03-03-06/1/796). Tax authorities also share the same point of view (letter of the Federal Tax Service of Russia dated April 18, 2007 No. 04-1-02/306@).

However, the courts allow the recognition of these expenses, and often as part of representative expenses. The concept of official reception and service of business partners is not specified in the Tax Code. These terms have a broad meaning and may, in the opinion of judges, include hotel services or the provision of other housing to a person arriving from another city or from abroad (resolution of the Federal Antimonopoly Service of the West Siberian Federal Antimonopoly Service dated March 1, 2007 No. Ф04-9370/2006 (30552-A81-27) and North-Western district dated 05.17.04 No. A56-21571/03).

Another option for accounting for living expenses of nonresident or foreign business partners, supported by arbitration courts, is to include them in other expenses associated with production or sales, on the basis of subparagraph 49 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation (Resolution of the Federal Antimonopoly Service of Moscow dated May 23, 2011 No. KA -A40/4584-11 and Ural district dated 08.11.05 No. Ф09-4994/05-С7).

Thus, if an organization is ready to defend its interests in court, it can recognize expenses for paying for the accommodation of non-resident or foreign business partners when calculating income tax. Obviously, it is easier to classify them as other justified expenses, since in this case the company will not have to draw up a whole series of additional supporting documents.

Lack of budget for the event

This is not an error, but the absence of the specified document can lead to disagreements with the tax authorities. The problem is that the Tax Code does not establish a clear list of documents confirming entertainment expenses. An approximate list of them can only be found in letters from the Russian Ministry of Finance, and the estimate of entertainment expenses is mentioned in this list.

Local inspectors often insist that the package of supporting documents recommended by the Russian Ministry of Finance is mandatory. Consequently, the absence of at least one of them entails a refusal to recognize entertainment expenses (letter of the Federal Tax Service of Russia for Moscow dated December 22, 2006 No. 21-11/113019@). Moreover, tax authorities usually require that an estimate be drawn up for each entertainment event separately.

What documents are required to confirm hospitality expenses?

According to the Ministry of Finance of Russia, in order to confirm entertainment expenses, the company will need (letters dated 01.11.10 No. 03-03-06/1/675, dated 22.03.10 No. 03-03-06/4/26 and dated 13.11.07 No. 03 -03-06/1/807):

— order or instruction from the head of the organization to hold a representative event;

— estimate of entertainment expenses;

— primary documents confirming the purchase of goods and services from third parties used for representative purposes (contracts, invoices, invoices, applications, work orders, acts of work or services, invoices, cash and sales receipts, other payment documents );

— a report on actual expenses incurred for entertainment events. It reflects the goals and results of these activities, and also indicates the total cost of their implementation.

The courts come to the conclusion that an estimate is not necessary to confirm entertainment expenses. After all, these expenses can be confirmed by other papers, primarily primary documents for the purchase of goods and services for entertainment purposes (Resolution of the Federal Antimonopoly Service of the Ural District dated August 23, 2011 No. F09-4143/11).

The company wrote off entertainment expenses in excess of the standard

Suppose, having considered that the standard at the end of the year will be a large amount, the organization already recognized the entire amount of entertainment expenses incurred in the first quarter, although it exceeded 4% of the amount of labor costs for this quarter. Under no circumstances should you do this.

The maximum amount of entertainment expenses that can be taken into account when calculating income tax is determined based on the results of each reporting period (clause 2 of Article 264 and clause 3 of Article 318 of the Tax Code of the Russian Federation). That is, it is calculated on an accrual basis from the beginning of the year to the end of the first quarter, the first half of the year and 9 months of the year. The final value of the standard is determined at the end of the calendar year, that is, on December 31.

Indeed, entertainment expenses incurred in the first quarter, but not recognized in this period due to the fact that they exceeded the limit, may subsequently be partially or even fully included in expenses. But before the end of the 1st half of the year, 9 months or calendar year, it cannot be said with confidence that this will happen.

Consequently, based on the results of each reporting period, and then the year, the organization must calculate the standard for entertainment expenses and determine the amount that it has the right to take into account when calculating income tax for the corresponding period. Early recognition of entertainment expenses, for example, based on the wage fund for the previous year, is unacceptable. This directly follows from the norms of the Tax Code of the Russian Federation.

Accounting for last year's entertainment expenses

The balance of entertainment expenses not taken into account in the calendar year in which they were incurred is not carried over to the next year. After all, such a possibility is not provided for by the Tax Code. Moreover, entertainment expenses of the current year are recognized for this year only (paragraph 3, paragraph 2, article 264 of the Tax Code of the Russian Federation).

Paragraph 42 of Article 270 of the Tax Code of the Russian Federation also states that entertainment expenses in excess of their maximum amount for a calendar year are not taken into account when calculating income tax. This means that there are no legal grounds for postponing them to next year.

VAT deduction on hospitality expenses

A situation is possible when an organization has accepted for deduction the entire amount of VAT related to entertainment expenses, despite the fact that some of them were not taken into account when calculating income tax due to the excess of the standard. This would be a mistake.

In order to deduct VAT on entertainment expenses, it is necessary to fulfill not only the general requirements for the use of deductions, but also two additional conditions (clause 7 of Article 171 of the Tax Code of the Russian Federation).

Firstly, VAT can be deducted only for those entertainment expenses that are taken into account when calculating income tax. For example, expenses for organizing entertainment, recreation, prevention or treatment of diseases are not considered entertainment expenses and are not taken into account for tax purposes. This means that VAT on such expenses is not deductible.

Secondly, VAT on expenses normalized when calculating income tax is also subject to deduction in the amount corresponding to the standard (paragraph 2, paragraph 7, article 171 of the Tax Code of the Russian Federation). It turns out that an organization has the right to deduct all VAT claimed on entertainment expenses only if the amount of these expenses does not exceed 4% of the wage fund for the reporting period. And then only on condition that the remaining conditions required for deducting VAT are met (clause 2 of Article 171 and clause 1 of Article 172 of the Tax Code of the Russian Federation).

If, when calculating income tax, the company recognized only a part of entertainment expenses that does not exceed the standard, it deducts VAT on them in the appropriate proportion. At the end of subsequent reporting periods of the same year, expenses may no longer be excess. In the quarter in which the organization recognizes them in tax accounting, it has the right to deduct VAT on “additional” entertainment expenses. The Russian Ministry of Finance now agrees with this (letter dated November 6, 2009 No. 03-07-11/285).

VAT on excess entertainment expenses

If you include this amount in other expenses, then this will be a gross violation. Entertainment expenses exceeding the established limit of 4 percent of the amount of the organization’s expenses for wages are not taken into account when calculating income tax (clause 42 of Article 270 of the Tax Code of the Russian Federation). Consequently, VAT related to them cannot be included in other or other expenses. Moreover, the indicated VAT amounts do not meet the expense criteria (clause 1 of article 252 and clause 49 of article 270 of the Tax Code of the Russian Federation). The Russian Ministry of Finance shares a similar opinion (

In accounting, entertainment expenses are expenses for ordinary activities (clauses 5, 7, 18 of PBU 10/99 “Expenses of the organization”). They are reflected by the entry: Debit account 44 “Sales expenses” Credit account 60 “Settlements with suppliers and contractors”, 71 “Settlements with accountable persons”, 76 “Settlements with various debtors and creditors”, 10 “Materials”, etc.
In tax accounting in accordance with paragraphs. 22 clause 1 art. 264 of the Tax Code of the Russian Federation, entertainment expenses associated with the official reception and service of representatives of other organizations participating in negotiations in order to establish and maintain cooperation are included in the calculation of income tax as part of those associated with production and (or) sales.

What expenses are considered entertainment expenses?

In accordance with paragraph 2 of Art. 264 of the Tax Code of the Russian Federation, entertainment expenses include expenses for official reception and (or) servicing of representatives of other organizations participating in negotiations in order to establish and (or) maintain mutual cooperation, as well as participants arriving at meetings of the board of directors (board) or other governing body taxpayer, regardless of the location of these events.
The following are recognized as representative:

• expenses for holding an official reception (breakfast, lunch or other similar event) for these persons, as well as for officials of the taxpayer organization participating in the negotiations;
• expenses for transportation support for the delivery of these persons to the venue of the representative event and (or) meeting of the governing body and back;
• expenses for buffet service during negotiations;
• expenses for the services of translators who are not on the taxpayer’s staff to provide translation during entertainment events.

In Letter dated November 1, 2010 N 03-03-06/1/675, the financial authority drew attention to the fact that events should wear official character.

Expenses that are not representative

Not recognized as representative expenses for organizing entertainment, recreation, prevention or treatment of diseases (clause 2 of article 264 of the Tax Code of the Russian Federation).
For example, the Ministry of Finance explained that when calculating income tax, expenses for organizing a buffet table, a boat trip and inviting artists as part of an entertainment program organized by after the official part of the seminar, as well as expenses for guests’ accommodation, since these expenses are not provided for in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation (Letter dated December 1, 2011 N 03-03-06/1/796). Accordingly, it is impossible to recognize as expenses the costs of holding an event that is not of an official nature (Letter of the Ministry of Finance of Russia dated November 1, 2010 N 03-03-06/1/675).

Procedure for recognizing expenses and deducting VAT

Clause 2 of Art. 264 of the Tax Code of the Russian Federation establishes that entertainment expenses are included in the tax base during the reporting (tax) period in an amount not exceeding 4% of the taxpayer’s expenses for wages for this reporting (tax) period.

Let us recall that income and expenses when calculating profit tax are taken into account on an accrual basis from the beginning of the year (clause 7 of article 274, article 315 of the Tax Code of the Russian Federation), and labor costs are determined on the basis of art. 255 Tax Code of the Russian Federation.

When applying the accrual method, expenses are recognized in the reporting (tax) period to which they relate, regardless of the time of actual payment of funds and (or) other form of payment (clause 1 of Article 272 of the Tax Code of the Russian Federation), and when using the cash method - after their payment (clause 3 of article 273 of the Tax Code of the Russian Federation).

When purchasing goods (services) for representative purposes by an accountable person, in accordance with paragraphs. 5 paragraph 7 art. 272 of the Tax Code of the Russian Federation, the date of their implementation is the date of approval of the advance report.

In accounting, expenses for ordinary activities are recognized in the reporting period in which they occurred, regardless of the time of actual payment of funds and other forms of implementation (assuming the temporary certainty of the facts of economic activity) (clause 18 of PBU 10/99 "Expenses of the organization "). Entertainment expenses are recognized in accounting in full.

Example. In the first quarter of 2014, the catering company spent 50,000 rubles on hospitality expenses. (without VAT). Labor costs for this period amounted to RUB 500,000.
The standard within which an enterprise has the right to recognize entertainment expenses for the first quarter of 2014 when calculating income tax will be 20,000 rubles. (RUB 500,000 x 4%). Accordingly, in the first quarter only part of the entertainment expenses can be recognized as expenses. The remaining part equal to 30,000 rubles. (50,000 - 20,000), the company will be able to recognize in the following reporting (tax) periods (within the standard).

Let us recall that due to the different procedures for recognizing entertainment expenses in accounting and tax accounting, an organization applying PBU 18/02 “Accounting for calculations of income tax of organizations” will have a deductible temporary difference equal to the amount of excess expenses, and, accordingly, a deferred tax asset (clauses 8 - 11, 14 PBU 18/02), as well as a permanent difference equal to the amount of entertainment expenses not recognized at the end of the year, and the corresponding permanent tax liability (clauses 4, 7 PBU 18/ 02).

The deferred tax asset is reflected in accounting by the entry: Debit of account 09 “Deferred tax assets” Credit of account 68 “Calculations for taxes and fees”, and the permanent tax liability is reflected by the entry: Debit of account 99 “Profits and losses” Credit of account 68.

"Input" VAT on entertainment expenses by virtue of clause 7 of Art. 171 of the Tax Code of the Russian Federation is accepted for deduction within the limits established by clause 2 of Art. 264 Tax Code of the Russian Federation. Tax on excess expenses not accepted for deduction in one tax period of a calendar year can be deducted in those tax periods in which they are included in the calculation of income tax (Letters of the Ministry of Finance of Russia dated November 6, 2009 N 03-07-11/285 , Federal Tax Service for Moscow dated 09.12.2009 N 16-15/130757).

VAT not accepted for deduction at the end of the calendar year on entertainment expenses is not taken into account when calculating income tax. In accounting, it is reflected as part of other expenses by the entry: Debit of account 91 “Other income and expenses”, subaccount 91-2 “Other expenses” Credit of account 19 “Value added tax on acquired assets”.

If negotiations do not bring results...

According to paragraph 1 of Art. 252 of the Tax Code of the Russian Federation, in order to recognize expenses for profit tax purposes, they must be economically justified, documented and incurred to carry out activities aimed at generating income.

The question arises: is it possible to take into account the costs of holding official receptions, business meetings and other similar events if there are no documents confirming a positive result from them, or if there are no such results at all?

The financial authority in Letters dated 04/10/2013 N 03-03-06/2/11897, dated 10/09/2012 N 03-03-06/1/535 noted that according to the Determination of the Constitutional Court of the Russian Federation dated 06/04/2007 N 320-O-P the norms contained in paragraph 1 of Art. 252 of the Tax Code of the Russian Federation do not allow their arbitrary interpretation, since they require the establishment of an objective connection between the expenses incurred by the taxpayer and the focus of his activities on making a profit, and the burden of proving the unfoundedness of the taxpayer’s expenses rests with the tax authorities.

Documents confirming entertainment expenses

The corresponding expenses are taken into account as part of entertainment expenses if there are primary documents drawn up within the framework of the current legislation confirming the expenses for holding business dinners as part of negotiations with clients, including potential ones, during business trips, provided that they comply with the requirements of paragraph 1 of Art. 252 of the Tax Code of the Russian Federation (Letter of the Ministry of Finance of Russia dated November 1, 2010 N 03-03-06/1/675).

At the same time, the financial authority recalled that, according to Art. 313 of the Tax Code of the Russian Federation, the basis for determining the tax base for income tax is the data of primary documents, grouped in the manner prescribed by the Tax Code of the Russian Federation.

Tax accounting data is confirmed by:

• primary accounting documents (including an accountant’s certificate);
• analytical tax accounting registers;
• calculation of the tax base.

According to the Ministry of Finance, documents used to confirm entertainment expenses may be, in particular:

• order (instruction) of the head of the organization on the implementation of expenses for these purposes;
• estimate of entertainment expenses;
• primary documents, including in the case of using any goods purchased externally for representation purposes, payment for services of third-party organizations;
• , which reflects the goals of the events, the results of their implementation, other necessary data on the events held and the amount of expenses for entertainment purposes.

At the same time, financiers noted that all expenses listed in the report must be confirmed by relevant primary documents.

In the Letter of the Federal Tax Service for Moscow dated 04/12/2007 N 20-12/034115 it is noted that when purchasing goods (services) for representative purposes by an accountable person, supporting documents will be primary documents issued by relevant organizations to the accountable person (for example, cash and sales receipts, acts of acceptance and transfer of goods, provision of services), as well as an advance report on the use of accountable amounts.

When concluding an agreement with a third-party organization, documentary evidence of the implementation of entertainment expenses will be an agreement with this organization, an act of performance of work (provision of services), an invoice, an invoice. If translators who are not on the staff of the organization are involved, the costs are also confirmed by relevant contracts, certificates of completed work and other documents.

Judges on documentary evidence of entertainment expenses. In the Resolution of April 17, 2013 N 09AP-4914/2013 (by the Resolution of the Federal Antimonopoly Service of the Moscow Region dated September 17, 2013 N A40-115570/12-99-601, this Resolution was left unchanged). The Ninth Arbitration Court of Appeal noted that the legislation of the Russian Federation does not define a list of documents that must be used to confirm entertainment expenses for the purpose of calculating income tax. According to the arbitrators, the documents presented by the company in the case under consideration confirm the costs incurred and included in the representation expenses, their connection with the company’s core activities. The inspector's argument about the inadmissibility of incurring entertainment expenses during non-working hours was also rejected, since there is no such condition in the Tax Code.

In the Resolution of the FAS VSO dated November 27, 2013 N A33-19185/2012, the arbitrators indicated that expenses in order to be recognized as representative expenses must be made for a specific purpose, and not be arbitrary, limited only in size, and they must meet those established in Art. 252 of the Tax Code of the Russian Federation criteria (to be justified and documented). In this case, the first and appellate instances came to the conclusion that the company did not provide evidence of business negotiations, reception of delegations of counterparties, or the presence of other connections with activities aimed at generating income, as well as documents on the write-off of disputed inventory items. The cassation court agreed with these conclusions, recognizing as legitimate the conclusion of the courts that there are no legal grounds for taking into account such expenses when calculating and paying income tax.

In the Resolution of the FAS UO dated January 19, 2012 N F09-9140/11, tax authorities reclassified entertainment expenses as expenses for holding a corporate holiday. The judges recognized this conclusion as unproven on the basis that when examining the evidence available in the case materials (acts for the performance of work, provision of services, payment orders, bills, invoices, acts, cash orders, reports on the reception of representatives of suppliers and buyers, copies of invitations from officials) it was revealed that the controversial meeting was aimed at maintaining (establishing) mutual cooperation with counterparties, that is, the purpose of holding this meeting for the entrepreneur was to receive income from business activities.

So, as we see, when disputes arise regarding representation expenses, judges also pay attention to their documentary evidence.

Expenses for alcoholic drinks are included in entertainment expenses

In Letter dated March 25, 2010 N 03-03-06/1/176, the financial authority explained that the taxpayer’s expenses for organizing an official meeting with clients to discuss issues related to concluding contracts in accordance with clause 2 of Art. 264 of the Tax Code of the Russian Federation are recognized in terms of expenses for the purchase of food products, including alcoholic beverages.

However, despite the positive position of the Ministry of Finance, in Resolution of the Federal Antimonopoly Service dated January 15, 2013 N A55-14189/2012, tax authorities assessed additional income tax due to the taxpayer’s inclusion of expenses for the purchase of alcoholic beverages as entertainment expenses taken into account when calculating taxable profit.

The judges declared this illegal on the grounds that Art. 264 of the Tax Code of the Russian Federation does not contain a list of foods and drinks that cannot be included in entertainment expenses. At the same time, the case materials confirm that these expenses were incurred by the company in order to establish and maintain cooperation with counterparties and they are related to the implementation of activities aimed at generating income.

Event location

Although in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation and it is said that the venue for a representative event can be any, sometimes regulatory authorities think otherwise. In particular, this applies to the situation when a motor ship is chosen as the venue for such an event. It’s one thing when he is chosen to entertain the participants of the event after its end, as stated in the Letter of the Ministry of Finance of Russia dated December 1, 2011 N 03-03-06/1/796. It is difficult to argue in such a situation. It’s a completely different matter when the ship is rented specifically for an official event.

This case was dealt with in the Resolution of the Federal Antimonopoly Service of the Moscow Region dated September 3, 2013 N A40-22927/12-107-106. The tax authorities came to the conclusion that the company unlawfully included in the expenses for corporate income tax the costs of holding a technical seminar on a ship and the cost of renting premises (a ship) for hosting a foreign delegation, since these events were not of an official nature and were carried out for the purpose of recreation and employee entertainment.

The judges sided with the taxpayer, pointing out that the disputed expenses were of a production nature, were justified and documented, and therefore the company lawfully recognized them when calculating income tax and applied a VAT deduction.

The tax authority’s argument that such expenses are not documented and economically justified, since they are not aimed at generating income, and the result of the provision of services cannot be used in production activities, was also rejected by the arbitrators, since the expenses were incurred as part of the taxpayer’s main activity in order to demonstrate to the company’s employees and its regular partners the dynamics of development and plans for the coming period, as well as to maintain mutual cooperation. The fact of incurring and the amount of expenses is confirmed by relevant primary documents.

The argument that the company’s expenses are inappropriate was also rejected on the basis that, in accordance with the legal position of the Constitutional Court of the Russian Federation, set out in Determination No. 366-O-P dated 04.06.2007, tax legislation does not use the concept of economic feasibility, therefore the validity expenses cannot be assessed from the point of view of their feasibility; the taxpayer independently determines the feasibility of such expenses.

Travel and accommodation expenses for representatives from other cities (countries)

According to the position of officials, expenses for guest accommodation do not reduce the tax base for corporate income tax, since these expenses are not established by clause 2 of Art. 264 of the Tax Code of the Russian Federation (Letter of the Ministry of Finance of Russia dated December 1, 2011 N 03-03-06/1/796).

In Letter dated July 14, 2006 N 28-11/62271, the capital’s tax authorities also drew attention to the fact that the current tax legislation does not provide for the possibility of recognizing as entertainment expenses when calculating income tax the costs of hotel accommodation in the event of the arrival of foreign business partners for the purpose of establishing and maintaining mutual cooperation.

At the same time, the cost of air and railway tickets, payment for travel by any other transport of foreign representatives (except for transport support for the delivery of these persons to the venue of the representative event), as well as visa support for employees of a foreign organization along the route from another state to the border of the Russian Federation and directly across the territory RF are not taken into account for tax purposes of a Russian organization and, in particular, do not apply to entertainment expenses.

Based on this, tax authorities believe that the amounts of travel and accommodation of persons invited for negotiations are recognized as income received by such individuals in kind and are subject to personal income tax in the generally established manner.

Note: in the Resolution of the Federal Antimonopoly Service of the Moscow Region dated May 23, 2011 N KA-A40/4584-11, the judges also noted that the list of entertainment expenses specified in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation is closed, the costs of issuing tickets and visas, accommodation of participants in official events are not included in this list, therefore, they cannot be classified as entertainment expenses, but they recognized that the company rightfully qualified them as other expenses associated with production and sales, on the basis of paragraphs. 49 clause 1 art. 264 Tax Code of the Russian Federation.

Regarding travel expenses for nonresident representatives, the position of officials seems unreasonably categorical. So, in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation states that representative expenses are considered to be transportation costs for the delivery of representatives of other organizations to the venue of the event and (or) meeting of the governing body and back. And if potential partners are located in other cities or countries, then the cost of purchasing air and train tickets for their employees is the transportation support for their delivery to the venue of the event.

Paying for housing for non-residents is also a reasonable expense, since the initiator of the event and the person interested in the arrival of representatives of other organizations from other cities or even countries is the host party. And if she refuses to pay these costs, then there may not be anyone willing to participate in the negotiations from other places.

It will help to confirm the need for such expenses, for example, by indicating in invitations that the inviting party will bear the costs of travel and accommodation. A similar clause can be included in the order (instruction) of the head of the organization on the implementation of expenses for entertainment purposes. In any case, you need to be prepared for the fact that these expenses will have to be defended in court, but the presence of such documents will increase the chances of finding support from the judges.

So, in tax accounting, entertainment expenses are taken into account in an amount not exceeding 4% of the taxpayer’s expenses for wages for the reporting (tax) period. Within the limits of the standard, “input” VAT on such expenses is also deductible. There are no accounting restrictions for their recognition.

Also, for their participation in the calculation of income tax, it is important that the events are of an official nature. Expenses for organizing entertainment, recreation, prevention or treatment of diseases are not recognized as representative expenses.

Even if entertainment expenses do not bring a positive result, the taxpayer has the right to recognize them when calculating income tax, since the main thing is the connection of these expenses with the focus of his activities on making a profit.

Most often, regulatory authorities make claims regarding the documentation of expenses incurred. In this regard, this issue needs to be given close attention, which also increases the chances of support in court.

Officials have a positive attitude towards recognizing the cost of alcoholic beverages as entertainment expenses. However, despite this, there are examples where taxpayers have to defend such expenses in court.

The location of the event (in particular, the ship) is also a subject of dispute. You will have to defend in court the travel and accommodation costs of representatives from other cities (countries). There are examples when judges recognized them as justified not as part of entertainment expenses, but as other expenses associated with production and sales, on the basis of paragraphs. 49 clause 1 art. 264 Tax Code of the Russian Federation.

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

Entertainment 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 for official reception, escort 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 will be considered.

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. Number of participants also does not define entertainment 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;
   • dinner;
   • off-site meeting.

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

2. Buffet service accompanying said reception event.
3. Transfer of participants to the reception site and back.
4. 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 satisfy 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.

Documents to confirm hospitality expenses

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:

• director's order about holding a representative event - be sure to indicate the purpose, date, time and place of the reception, list the counterparties taking part, and also provide the names of responsible and controlling persons;
• future event program– will not be valid without an order; in it, the main stages of the representative meeting must be tied to specific dates and times;
• event estimate– a list of expenses for specific items (transport, canteen, etc.), it is better to create it for each stage separately, be sure to approve it with management;
• event report– drawn up by the responsible person specified in the order, it reflects all the same positions as in the order, plus the specific achieved result of each stage (especially if during the event any official agreements were concluded or documents were signed);
• act for writing off this type of expense– carries 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).

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 amount 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.

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.

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.

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 entertainment 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.

Representation expenses and accounting

While the definition of the category “representation expenses” is very important for tax accounting, they are not separately identified in accounting. They are recorded as expenses for ordinary activities, namely:

• material costs;
• depreciation;
• related to wages and social benefits;
• others.

It is most logical to classify entertainment expenses into the “other” category. Clause 8 of PBU 10/99 says that the organization itself has the right to create a list of them for accounting purposes. Depending on the specifics of the company's activities, these expenses can be reflected as general business expenses or sales expenses. In this case, correspondence can be carried out with the account for accounting calculations or financial values.

Postings such expenses will be made on accounts 26 (mainly for industrial organizations) or 44 (more often used by trading companies):

• debit 26 “General business expenses” or 44 “Sales expenses”, credit 60 “Settlements with suppliers and contractors” - services or work related to entertainment expenses are taken into account;
• debit 26 “General business expenses” or 44 “Sales expenses”, credit 10 “Materials” - material assets for a hospitality event are written off (for example, food, drinks, alcohol).

FOR EXAMPLE. Artabolena LLC pays advance income tax payments every month, counting them according to the fact of profit. For 11 months of 2016, labor costs at Artabolena LLC amounted to 300 thousand rubles. Entertainment expenses (excluding VAT) for these 11 months amounted to 13 thousand rubles.

When calculating the annual income tax, Artabolena LLC can take into account entertainment expenses in the amount of no more than 4% of 300,000 rubles, that is, 12,000 rubles. Thus, an excess of 1 thousand rubles is obtained for entertainment expenses. From a tax perspective, this will be a permanent difference, dictating a permanent tax liability.

The wiring will look like this:

• debit 99, subaccount “Fixed tax liabilities”, credit 68, subaccount “Calculations for income tax” - 24% of 1000 rubles. – 240 rub. – reflection of a permanent tax liability.

In the last month of 2016, labor costs at Artabolena LLC amounted to 35 thousand rubles, which means that for the year they will amount to 300,000 + 35,000 = 335,000 rubles. There were no entertainment events this month. This means that the amount of relevant expenses remained unchanged - 13,000 rubles. The Tax Code of the Russian Federation allows you to take into account entertainment expenses in the amount of 4% of 335 thousand rubles, that is, 13,400 rubles. Therefore, despite the overexpenditure during the year, according to its results, Artabolena LLC met the standard for entertainment expenses. The accounting will record:

• debit 99, subaccount “Continuous tax liabilities”, credit 68, subaccount “Calculations for income tax” - the amount of the previously accrued tax liability of 240 rubles. reversed.

1) preparation of general documents;

2) preparation of documents related to a specific event;

3) preparation of documents confirming the actual expenditure of funds.

In accordance with PBU 10/99, in accounting, entertainment expenses are taken into account in full and are reflected as expenses for ordinary activities.

Taking these expenses into account, the organization’s accountant, in accordance with the Chart of Accounts, reflects them in the debit of account 26 “General business expenses” in correspondence with the credit of the accounts:

If an organization is engaged in trading activities, then entertainment expenses may be reflected in account 44 “Sales expenses”.

Recognition of entertainment expenses in accounting on the basis of paragraph 18 of PBU 10/99 is carried out in the reporting period in which they occurred, regardless of the time of their payment.

As a rule, entertainment expenses are carried out by accountable persons, therefore, recognition of entertainment expenses is carried out as soon as the advance report of the accountable person is approved.

When determining the financial result, entertainment expenses are written off to account 20 “Main production” or immediately attributed to account 90 “Sales” subaccount “Cost of sales” (depending on which method of writing off administrative expenses is fixed in the accounting policy of the organization).

Let's look at a specific example of how entertainment expenses are reflected in an organization's accounting records.

Example 1.

Let’s assume that Melena LLC held business negotiations with representatives of Raduga LLC in February 2006, as a result of which an agreement was reached to organize joint production of furniture. Melena LLC organized an official dinner in the restaurant, the cost of service was 11,800 rubles including VAT. The restaurant bill was paid by the accountable person responsible for the official meeting. When servicing meeting participants, there was a fee for the services provided. The invoiced amount for transport services was 1,180 rubles, including VAT. The services of the transport organization were paid from the current account.

Let's assume that there were no other expenses during the negotiations. Thus, the amount of entertainment expenses in this situation for Melena LLC amounted to 12,980 rubles, including VAT.

When approving the expense report, the organization’s accountant will reflect the following in the accounting records:

Note!

In connection with the amendments made to Article 172 of the Tax Code of the Russian Federation by Federal Law No. 119-FZ of July 22, 2005 “On amendments to Chapter 21 of Part Two of the Tax Code of the Russian Federation and on the recognition as invalid of certain provisions of acts of legislation of the Russian Federation on taxes and fees ”, which came into force on January 1, 2006, the application of VAT deductions for goods (works, services), property rights is not conditional on payment to suppliers.

It is enough that the goods (work, services), property rights are intended for use in taxable activities, are accepted for registration, and the buyer has a properly executed invoice in his hands.

End of the example.

Chapter 25 of the Tax Code of the Russian Federation includes entertainment expenses as part of other expenses associated with production and sales (subclause 22 of clause 1 of Article 264 of the Tax Code of the Russian Federation).

Representation expenses during the reporting (tax) period are included in other expenses taken into account when determining the tax base for income tax, in an amount not exceeding 4 percent of the taxpayer’s expenses for wages for this reporting (tax) period. This is precisely the rule established by paragraph 3 of subparagraph 22 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation.

Note!

Entertainment expenses in terms of exceeding the maximum amount established by the Tax Code of the Russian Federation are included by the taxpayer as expenses not taken into account for taxation (clause 42 of Article 270 of the Tax Code of the Russian Federation).

The date of recognition of entertainment expenses for taxpayers using the accrual method, in accordance with paragraph 5 of Article 272 of the Tax Code of the Russian Federation, is the date of approval of the advance report.

We remind you that in accordance with paragraph 3 of Article 318 of the Tax Code of the Russian Federation, the basis for calculating the maximum amount of entertainment expenses is determined by the taxpayer, cumulatively from the beginning of the tax period.

Example 2.

(In the example under consideration, the amounts are given excluding value added tax).

Transport services for negotiation participants – 1000 rubles.

Theater tickets – 1000 rubles.

Buffet service at the theater amounted to 1,200 rubles.

Analyzing these expenses of the organization, the organization's accountant must exclude from the entertainment expenses related to this meeting the amount associated with visiting the theater, since the costs associated with organizing entertainment, namely: the cost of tickets to the theater, delivery of delegation members to the theater and buffet services in the theater are not considered entertainment for income tax purposes. Consequently, the amount of expenses of the organization recognized as representative expenses for tax purposes will be 11,000 rubles.

Let's assume that in the 1st quarter of 2006, labor costs at Melena LLC amounted to 235,000 rubles, therefore, the standard for entertainment expenses will be equal to 235,000 rubles x 4% = 9,400 rubles. The standard value is less than the amount of actual costs - 11,000 rubles. Consequently, LLC Melena, for tax purposes, will be able to accept entertainment expenses within the standard (9,400 rubles), and the amount of 1,600 rubles (11,000 rubles - 9,400 rubles) will not be taken into account when determining the taxable base for income tax.

End of the example.

Since entertainment expenses in accounting are accepted in full, and in tax accounting they are recognized in an amount not exceeding 4% of the amount of labor costs, this leads to a difference between accounting and tax profit.

Moreover, with regard to entertainment expenses, it is not always possible to immediately say clearly what difference will arise for the taxpayer - permanent or temporary. The only exception is the case when expenses incurred by the taxpayer cannot be considered representative from the point of view of the Tax Code of the Russian Federation. Such a difference is immediately recognized as permanent and forms a permanent tax liability, which is the amount of tax leading to an increase in income tax in the reporting period.

It may also happen that in one reporting period the standard for entertainment expenses will be less than the amount of actual expenses, and the taxpayer will accept as expenses the amount of entertainment expenses within the standard, and in the next reporting period the amount of the standard will increase, because it depends on the amount of labor costs, which is determined by the cumulative total. In other words, it is possible that in the next reporting period the taxpayer will be able to take into account as expenses the entire amount of entertainment expenses, including those not previously taken into account.

We will consider the reflection in the accounting of permanent and temporary differences on the conditions of the above example.

Example 3.

(Amounts shown in the example do not include value added tax).

In February 2006, Melena LLC held negotiations with Raduga LLC with the aim of organizing joint production of furniture. Let’s assume that the organization’s costs for conducting these negotiations are:

Costs for an official reception (lunch in a restaurant) – 10,000 rubles.

Transport services for negotiation participants – 1,000 rubles.

During the negotiations, a cultural program was envisaged, namely a visit to the local drama theater.

Theater tickets – 1,000 rubles.

Delivery of participants to the theater and back - 500 rubles.

Buffet service at the theater amounted to 1,200 rubles.

Thus, the total cost of receiving the delegation from Melena LLC amounted to 13,700 rubles.

Analyzing these expenses of the organization, the organization's accountant must exclude from the entertainment expenses related to this meeting the amount associated with visiting the theater, since the costs associated with organizing entertainment, namely: the cost of tickets to the theater, delivery of delegation members to the theater and buffet services in the theater are not considered entertainment for income tax purposes. Thus, the amount of 2,700 rubles forms a permanent difference and the accountant must record a permanent tax liability in the amount of 2,700 rubles x 24% = 648 rubles.

The amount of expenses of the organization recognized as representative expenses for tax purposes will be 11,000 rubles.

Let's assume that in the 1st quarter of 2006, labor costs at Melena LLC amounted to 235,000 rubles, therefore, the standard for entertainment expenses will be equal to 235,000 rubles x 4% = 9,400 rubles. The standard value is less than the amount of actual costs - 11,000 rubles. Consequently, for tax purposes, Melena LLC will be able to accept entertainment expenses within the standard (9,400 rubles), and the amount of 1,600 rubles (11,000 rubles - 9,400 rubles) will be recognized as a deductible temporary difference and the accountant must reflect the amount of deferred tax in accounting asset in the amount of 1600 rubles x 24% = 384 rubles.

The working chart of accounts of the organization's accounting stipulates that the balance sheet account:

Until the end of the current year, the specified amount may be:

· accepted for deduction if the actual amount of entertainment expenses does not exceed the maximum amount;

· written off in accounting as non-operating expenses if the actual amount of entertainment expenses turns out to be greater than the established standard.

Note!

When the second of these cases occurs, the organization will have to recognize in its accounting the amount of VAT not accepted for deduction as a permanent difference and accrue a permanent tax liability accordingly.

The organization’s working chart of accounts stipulates that the following are open to balance sheet account 68 “Calculations for taxes and fees”:

· subaccount 68-1 “Income tax”;

· subaccount 68-2 “Value added tax”.

In the accounting records of the organization, these business transactions will be reflected as follows:

End of the example.

Please note that the information provided below is not directly related to the rationing of entertainment expenses, but rather concerns the issues of classification of entertainment expenses. But, in our opinion, this information will be useful to the reader, since Article 264 of the Tax Code of the Russian Federation contains many ambiguities and quite often taxpayers are at a loss as to whether certain expenses can be considered representative expenses. For example, let’s take this type of entertainment expenses such as transportation services for meeting participants. What the legislator meant by these expenses remains a mystery: transport services within one locality, or something else? And if the negotiator is a foreigner and arrives from abroad, on a plane specially sent by the taxpayer, can such expenses of the company be considered representative or not?

Tax authorities categorically state that payment of travel costs for participants from other cities or countries where an official event will take place cannot be recognized as entertainment expenses. As evidence, one can cite the Letter of the Office of the Federal Tax Service (hereinafter referred to as the Federal Tax Service) for the city of Moscow dated November 11, 2004 No. 26-12/73173. But this clarification is contained only in a letter from the tax department, and is not stated in the law, so the taxpayer always has a chance to prove the opposite, albeit in court.

Or another example. Let's assume that business negotiations are held over several days and the organization pays for breakfasts, lunches and dinners (which are not of an official nature) for representatives of third-party organizations. Can these expenses be considered representative expenses?

The Ministry of Finance of the Russian Federation in its letter dated April 5, 2005 No. 03-03-01-04/1/157 explained that expenses for breakfasts, lunches and dinners that are not of an official nature should be paid by representatives of delegations arriving for negotiations at the expense of daily allowances paid when employees are sent on business, or from funds not taken into account for tax purposes by the receiving party.

In addition, paragraph 2 of Article 264 of the Tax Code of the Russian Federation also names the circle of persons who are decisive when attributing expenses for reception and service:

· representatives of the parties participating in the negotiations;

· participants who arrived at a meeting of the board of directors (board) or other governing body.

Therefore, if an organization incurs expenses for the reception of other persons, for example, members of the audit commission, then these expenses cannot be recognized as representative expenses, because the members of the audit commission are not the governing body of the organization.

As practice shows, tax authorities prohibit the following taxpayer expenses from being included in entertainment expenses:

· cost of gifts given to representatives of the delegation;

· for issuing visas for foreign partners (see Letter of the Office of the Ministry of the Russian Federation for Taxes and Duties for the City of Moscow dated February 13, 2002 No. 26-12/6751);

· for the decoration of premises for an official reception;

· to pay for the rent of the premises in which the official reception is held (see Letter of the Ministry of Finance of the Russian Federation dated March 12, 2003 No. 04-02-03/29).

However, existing arbitration practice shows that courts do not always agree with the opinion of the tax authorities, so the taxpayer always has a chance to challenge the position of the tax authorities in court.

As an example, here are a few court decisions.

Example 5.

The Inspectorate of the Ministry of the Russian Federation for Taxes and Duties carried out an inspection of a closed joint-stock company (hereinafter referred to as CJSC) on issues of compliance with legislation on taxes and fees for the period from January 1, 2001 to December 31, 2002. The tax inspectorate found that the company unreasonably included expenses on alcoholic beverages as entertainment expenses and accepted them for tax purposes.

Disagreeing with the decision, the company appealed to the arbitration court.

In satisfying the stated requirements, the arbitration court proceeded from the fact that the CJSC rightfully classified as entertainment expenses and accepted for tax purposes the expenses for the purchase and presentation of flowers, expenses for alcoholic beverages in the amount of 13,463 rubles.

The Federal Antimonopoly Service of the Volga District, having considered the case by way of supervision, sided with the taxpayer, indicating the following.

According to subparagraph 22 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation, other expenses associated with the production and (or) sale of goods (work, services) that reduce taxable profit include entertainment expenses associated with the official reception and servicing of representatives of other delegations participating in the negotiations in order to establish and maintain cooperation.

These entertainment expenses are confirmed by relevant primary documents.

The court considered whether the disputed expenses were expenses for organizing entertainment and recreation. At the same time, the tax authority did not provide the court with evidence that the disputed expenses are related to the organization of entertainment and recreation.

Having considered the circumstances of the case, the court declared the disputed expenses to be representative expenses, and the decision of the tax inspectorate to additionally charge the amount of income tax and penalties as invalid.

End of the example.

Example 6.

The Inspectorate of the Ministry of Taxes and Duties of the Russian Federation (Ministry of Taxes of the Russian Federation) conducted an on-site inspection of the LLC's compliance with legislation on taxes and fees in the period from January 1, 2001 to September 30, 2003, during which it revealed a number of tax violations. In particular, the taxpayer is accused of unjustifiably classifying expenses for alcoholic beverages as entertainment expenses that reduce income received, since they are not included in the list of expenses for entertainment purposes in accordance with paragraph 2 of Article 264 of the Tax Code of the Russian Federation.

Based on the results of the inspection, the inspectorate assessed the LLC with arrears of income tax and the corresponding amount of penalties, and also held it liable under paragraph 1 of Article 122 of the Tax Code of the Russian Federation in the form of a fine in the amount of 20% of the amount of unpaid tax.

The inspector's argument that paragraph 2 of Article 264 of the Tax Code of the Russian Federation contains an exhaustive list of expenses for entertainment purposes is unfounded. The said norm includes the taxpayer's expenses for official reception and (or) servicing representatives of other organizations participating in negotiations in order to establish and (or) maintain mutual cooperation, as well as participants arriving at meetings of the board of directors (board) or other governing body. taxpayer, regardless of the location of these events.

Entertainment expenses also include expenses for an official reception (breakfast, lunch or other similar event) for these persons, as well as officials of the taxpayer organization participating in the negotiations, transportation support for the delivery of these persons to the place of the entertainment event and (or) meeting governing body and back, buffet service during negotiations, payment for the services of translators who are not on the taxpayer’s staff to provide translation during entertainment events.

In this case, the inspectorate does not dispute that the real costs of the LLC for the purchase of alcoholic beverages are associated with the official reception and servicing of representatives of other organizations. These costs, in accordance with subparagraph 22 of paragraph 1 and paragraph 2 of Article 264 of the Tax Code of the Russian Federation, are classified as entertainment expenses, which reduce, in accordance with Article 252 of the Tax Code of the Russian Federation, the received income of the taxpayer.

End of the example.

Example 7.

Resolution of the Federal Antimonopoly Service of the Moscow District dated December 23, 2004 No. KA-A40/12097-04.

The Tax Inspectorate conducted inspections of the organization's compliance with the legislation on taxes and fees.

During the audit, it was revealed that the OJSC included in the entertainment expenses the costs of organizing the gala meeting, in particular the costs of hotel services (accommodation and meals) for representatives of other organizations.

Based on the results of the audit, the tax inspectorate decided to assess additional income tax, penalties and bring the OJSC to tax liability.

The Federal Antimonopoly Service of the Moscow District, having considered the case through supervisory procedures, sided with the taxpayer, indicating the following.

Clause 2 of Article 264 of the Tax Code of the Russian Federation stipulates that entertainment expenses include the taxpayer’s expenses for the official reception and service of representatives of other organizations.

Under such circumstances, the expenses incurred by the OJSC are reasonably classified as entertainment expenses.

End of the example.

The Federal Antimonopoly Service of the North-Western District shares the same opinion.

Example 8.

The Inspectorate of the Ministry of Taxes of the Russian Federation conducted an on-site tax audit of the company's compliance with tax legislation for 2001 - 2002.

The inspection revealed an unreasonable, in the inspector's opinion, decrease in income received in 2002 by the amount of expenses associated with hotel accommodation for members of the receiving delegation.

Based on the results of the audit, the tax authority made a decision according to which the CJSC was assessed additional income tax and penalties.

The Federal Antimonopoly Service of the North-Western District, having considered the case in the cassation instance, sided with the taxpayer, indicating the following.

From the case materials it is clear that the company in a letter guaranteed to the Czech side the reception and accommodation of members of the delegation during the exhibition in Moscow and negotiations on further cooperation.

Representation expenses are provided for by the order on the company's accounting policy for 2002; the estimate of representation expenses for 2002 was approved at the general meeting of shareholders of the company.

These expenses legitimately (according to paragraph 1 of Article 252 and paragraph 2 of Article 264 of the Tax Code of the Russian Federation) reduce the received income of the taxpayer organization.

In this regard, the decision of the tax authority was declared illegal.

End of the example.

Example 9.

The Tax Inspectorate conducted an on-site tax audit of the municipal unitary enterprise's compliance with the legislation on taxes and fees for the period from January 1, 2001 to July 13, 2003.

Based on the results of the audit, the tax authority decided to assess additional income tax and accrue penalties.

According to the tax authorities, the taxpayer unlawfully included in the amount of entertainment expenses that reduce taxable profit the costs of organizing the trip of representatives of a delegation of a third-party organization who arrived to negotiate ways of mutual cooperation in the field of business activities and the possibility of concluding mutually beneficial agreements, to the place of negotiations - on Solovki Island.

The tax authority considered holding negotiations on the island of Solovki, which is a tourism destination, impossible and, therefore, the expenses incurred by the municipal unitary enterprise were unreasonable and economically unjustified for the purposes of calculating income tax related to expenses for organizing entertainment and recreation, which, in accordance with paragraph 2 of Article 264 The Tax Code of the Russian Federation does not apply to entertainment expenses that reduce taxable profit.

The Federal Antimonopoly Service of the North-Western District, having considered the case in the cassation instance, sided with the taxpayer, indicating the following.

Paragraph 2 of Article 264 of the Tax Code of the Russian Federation specifically notes that entertainment and recreation expenses do not include expenses for organizing entertainment and recreation.

The court of first instance established that in the period from June 23 to June 26, 2002 (on working days - from Tuesday to Friday) negotiations took place on Solovki Island between representatives of the taxpayer and a third-party organization regarding the supply of raw materials for the production of bakery products. Transportation costs for ensuring the delivery of persons arriving for negotiations to the venue of the event and back are confirmed by relevant primary documents. As a result of negotiations, an agreement on the supply of vegetable oil was concluded.

The tax authority has not provided the court with evidence that the disputed expenses are related to the organization of entertainment and recreation.

Under such circumstances, as well as taking into account the taxpayer’s statement about the organization’s lack of premises suitable for receiving delegations of potential counterparties, conducting negotiations and concluding transactions, which was not refuted by the tax authority, the court invalidated the decision of the tax inspectorate to assess additional income tax and penalties.

End of the example.

In practice, there are quite often situations when tax authorities insist that it is illegal for an organization to classify expenses incurred in connection with an official reception as representative expenses in the event that As a result of the negotiations, no agreements were concluded.

But even in this case, the courts side with the taxpayers, pointing out that in order to classify these expenses as representative expenses, it is necessary that they comply with Articles 252 and 264 of the Tax Code of the Russian Federation. Achieving any specific results in the form of concluded agreements during the meeting or at the end of the meeting is not a prerequisite for recognizing the expenses incurred as representative expenses.

Example 10.

The tax inspectorate, based on the results of an on-site tax audit of the JSC regarding the correctness of the calculation and transfer of income tax for the period from January 1, 2000 to December 31, 2002, made a decision to additionally charge income tax, penalties and to hold the JSC liable under paragraph 1 of Article 122 of the Tax Code RF for incomplete payment of income tax. The basis for additional assessment of income tax was the conclusion that the tax base was understated due to the unreasonable inclusion in other expenses of expenses for official receptions of representatives of foreign companies. According to the inspectorate, since no contracts were signed based on the results of the activities carried out, the OJSC does not have the right to classify the costs incurred as entertainment expenses.

The Federal Antimonopoly Service of the Ural District, having considered the case in the cassation instance, sided with the taxpayer, indicating the following.

According to Articles 252, 264 of the Tax Code of the Russian Federation, justified and documented expenses of the taxpayer for official reception and (or) servicing of other organizations participating in negotiations in order to establish and (or) maintain mutual cooperation are taken into account for tax purposes.

Disputed expenses incurred by the taxpayer are documented.

The tax inspectorate’s reference to the lack of connection between the disputed costs and specific income was not accepted by the court of cassation, since, taking into account the nature of administrative expenses, they cannot be associated with a certain income (such as material ones), that is, it is enough that they exist in in principle in the appropriate amount.

End of the example.

For more information on issues related to regulated expenses, you can read the book of JSC “BKR-Intercom-Audit” “Standardized Expenses”.