To expand mutually beneficial cooperation with its counterparties and conclude new business agreements, the organization must conduct various types of techniques. Costs for such events are usually called entertainment expenses.

ACCOUNTING

Currently, regulations do not contain a definition of entertainment expenses. It can only be found in the Letter of the Ministry of Finance of the Russian Federation dated October 6, 1992 No. 94, where it looks like this:
“Representation expenses are the costs of an organization associated with its commercial activities, for receiving and servicing representatives of other organizations and institutions (including foreign ones) who arrived for negotiations in order to establish and maintain mutually beneficial cooperation, as well as participants who arrived for meetings of the council (board) organization and audit commission."

In the said Letter, the Ministry of Finance of the Russian Federation includes the following expenses as entertainment expenses:

• related to the official reception (breakfast, lunch or other similar event) of representatives (participants);
• transport support for reception participants;
• visiting cultural and entertainment events;
• buffet service during negotiations and cultural program events;
• payment for the services of translators who are not on staff of the organization.

The same definition was used in all subsequent documents that specified the amount of entertainment expenses taken into account in the cost of products (works, services) for tax purposes, including in Order of the Ministry of Finance of the Russian Federation dated March 15, 2000 No. 26n “Norms and standards for entertainment expenses, ..., regulating the amount of attribution of these expenses to the cost of products (works, services) for tax purposes, and the procedure for their application.”

Recognition of entertainment expenses in accounting

Accounting does not establish any restrictions on the types and amounts of entertainment expenses. They are included in expenses for ordinary activities and are recognized in the reporting period in which they arise, regardless of the time of actual payment.

The main requirement is that the costs of receiving and serving representatives of other organizations must be related to the establishment or maintenance of mutually beneficial cooperation, and the costs of receiving and serving participants who come to meetings of the council or audit commission must be related to the work of these bodies. Entertainment expenses incurred by the organization are reflected in full in the cost accounts.

Entertainment expenses can be taken into account as part of expenses for ordinary activities of the enterprise (clauses 5 - 8 of PBU 10/99 “Expenses of the organization”, approved by Order of the Ministry of Finance of the Russian Federation dated 05/06/1999 No. 33). In this case, entertainment expenses are current and are recorded on accounts 26 “General business expenses” or 44 “Sales expenses” in correspondence with the accounts:

• 60 “Settlements with suppliers and contractors”;
• 71 “Settlements with accountable persons”;
• 76 “Settlements with various debtors and creditors.”

In some cases, entertainment expenses may be included in capital investments if they are related to capital construction, modernization, reconstruction, acquisition of fixed assets or intangible assets. In this case, they will be reflected in the debit of account 08 “Investments in non-current assets” and included in the initial cost of fixed assets or intangible assets.

Entertainment expenses may be included in other operating expenses if they are related to the sale of fixed assets, intangible assets or securities. In this case, the amount of these expenses will be written off to the debit of account 91 “Other income and expenses”, subaccount 2 “Other expenses”.

TAX ACCOUNTING

Definition and composition of entertainment expenses

According to the Tax Code of the Russian Federation, representative expenses include the following expenses: official reception and service:

• representatives of other organizations participating in the negotiations;
• participants who arrived at a meeting of the board of directors, board or other governing body.

Entertainment expenses include 4 types of enterprise expenses.

1. Expenses for holding an official reception (breakfast, lunch or other similar event) for these persons, as well as for officials of the host organization who participate in the reception.
   • for renting premises;
   • for its design and decoration;
   • for equipment of stands, projectors, etc.

According to tax authorities, the expenses for an official reception include only those expenses that are directly related to catering. Consequently, all other expenses are not taken into account as entertainment expenses. In this case we are talking about the following expenses:

This position is set out in Letter No. 07-02-03/29 of the Tax Policy Department of the Ministry of Finance of the Russian Federation dated March 12, 2003.

2. Costs of transportation services - delivery of these persons to the venue of a representative event or meeting of the governing body and back.
3. Expenses for catering during negotiations.
4. Payment for the services of translators who are not on the staff of the host organization to provide translation during entertainment events.

Note! For profit tax purposes, the composition of entertainment expenses is closed, i.e., when calculating income tax, the expenses of the receiving party are not taken into account:

• to pay for services for obtaining visas, travel by rail or air transport for representatives of another organization or board of directors;
• to pay for their accommodation during negotiations or meetings of the board of directors in hotels or rented apartments.

In some cases, taxpayers were able to challenge this opinion of the tax authorities. For example, the Federal Antimonopoly Service of the North-Western District, in Resolution No. A56-21571/03 dated May 17, 2004, sided with the taxpayers. He agreed with the plaintiff’s arguments that the organization can include in hospitality expenses the costs of paying for the accommodation of participants at the official reception.

The following are also not included in hospitality expenses:

• for organizing entertainment, recreation, prevention and treatment of diseases;
• for the purchase of flowers, gifts and souvenirs for reception participants (Letter of the Department of Tax Administration of the Russian Federation for Moscow dated January 22, 2004 No. 26-08/4777);
• to serve the participants who arrived at the meeting of the Audit Commission.

Therefore, those expenses that are not specified in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation do not reduce the taxable profit of the enterprise.

Recognition of entertainment expenses

According to paragraph 1 of Art. 252 of the Tax Code of the Russian Federation, expenses are recognized as economically justified and documented expenses that were incurred by the organization.
Documented expenses mean expenses certified by documents that are drawn up in accordance with the legislation of the Russian Federation.

In tax accounting, entertainment expenses are classified as other expenses associated with production and sales (clause 2 of Article 264 of the Tax Code of the Russian Federation). Such costs are included in indirect costs, which fully reduce income from production and sales of the current reporting (tax) period (clause 2 of Article 318 of the Tax Code of the Russian Federation).

Entertainment expenses listed in clause 2 of Art. 264 of the Tax Code of the Russian Federation are included in the organization’s expenses for tax purposes, regardless of the following conditions:

1. Venue for a reception of representatives of other organizations or a meeting of the board of directors. The reception or meeting can be held in the place where the host organization is located, or in any other place (in another city, in another country). At the same time, it is necessary to resolve issues of safety of reception participants and technical support for the meeting.
2. The number of participants and their composition, both on the receiving side and on the counterparty side. The organization independently determines the composition of the meeting participants.
3. The end result of the negotiations. It does not matter whether the agreement was signed or not as a result of the meeting. In the event of a dispute with tax authorities, judges usually side with taxpayers (see, for example, Resolution of the Federal Antimonopoly Service of the Ural District dated June 17, 2004 No. F09-2441/04-AK).
4. Purpose of negotiations. At an official reception, issues regarding the sale of products (works, services), the acquisition of goods (works, services), joint activities, mergers of enterprises, etc. can be resolved.

Representation expenses standard

Entertainment expenses are standard expenses. This means that when calculating income tax for the reporting (tax) period, you can take into account these expenses in an amount not exceeding 4% of your organization’s labor costs for this period.

Expenses and income when calculating income tax are taken into account on an accrual basis throughout the year. Therefore, you need to recalculate the amount of expenses that falls within the established standard. This can be done monthly - if you make monthly advance payments, or quarterly - if you transfer quarterly advance payments for income tax.

Since in tax accounting the normalized expenses are not taken into account in full, then in accounting the costs turn out to be higher than in tax accounting. At the same time, expenses not taken into account in one reporting period may be recognized in another reporting period.
The amount of excess entertainment expenses represents a permanent difference. The resulting permanent difference can be taken into account both in a separate subaccount to the cost accounting accounts, and separately in the analytical accounting registers.

Based on the permanent difference, the organization is obliged to form permanent tax liabilities. This requirement is established by clause 7 of PBU 18/02, which was approved by Order of the Ministry of Finance of the Russian Federation dated November 19, 2002 No. 114n.
If a permanent difference arises during the reporting year, then in subsequent periods the specified amount of expenses may fall within the established limit. In this case, the accrued permanent tax liability must be reduced or completely written off.

Example

000 “Prizma” transfers advance payments for income tax monthly, based on actual profit.
For 11 months of 2004, Prizma LLC’s labor costs amounted to 200 thousand rubles. The amount of entertainment expenses for this period is 9 thousand rubles. (excluding VAT).

When calculating income tax for this period, Prizma LLC can take into account entertainment expenses in the amount of 8 thousand rubles as part of the costs of the current reporting period. (RUB 200,000 4%).

The amount of excess entertainment expenses in the amount of 1 thousand rubles. (9,000 8,000) is a permanent difference on the basis of which the accountant formed a permanent tax liability:

D 99/subaccount “PNO”
K 68/subaccount “Calculations”
for income tax":

240 rub. (RUB 1,000 24%) —
reflects the sum of constants
tax liability.

In December 2004, labor costs amounted to 30 thousand rubles. Consequently, for the year as a whole, labor costs are equal to 230 thousand rubles. The amount of hospitality expenses incurred by Prizma LLC during the reporting period did not change.
When calculating income tax for 2004 as a whole, 000 Prizma can take into account entertainment expenses in the amount of 9,200 rubles. (RUB 230,000 4%). This means that all entertainment expenses of Prizma LLC fall within the established standard.
The following entry was made in the accounting records:

D 99/subaccount “PNO”
K 68/subaccount “Calculations”
for income tax":

the amount of 240 rubles was reversed. —
previously accrued constant
tax liability.

How to determine the composition of labor costs

The composition of labor costs is specified in Art. 255 NKRF.
If you use the accrual method when calculating income tax, then in labor costs you include the corresponding amounts of payments in favor of employees that are accrued for the current reporting (tax) period.
If you use the cash method, only those amounts of payments that are actually paid to employees from the cash desk of your enterprise or transferred by bank transfer (Article 273 of the Tax Code of the Russian Federation) can be included in labor costs.

Note! List of labor costs in accordance with Art. 255 of the Tax Code of the Russian Federation is much broader than the composition of those expenses that are reflected in accounting under the credit of account 70 “Settlements with personnel for wages”.

For example, on the basis of clause 16 of Art. 255 of the Tax Code of the Russian Federation, labor costs include the following amounts:

1. Payments (contributions) of the organization under compulsory insurance contracts.
2. Payments (contributions) of the organization under voluntary insurance agreements or non-state pension agreements. We are talking about contracts that are concluded in favor of employees with insurance organizations or non-state pension funds. At the same time, an insurance organization or a non-state pension fund must have a license to conduct these types of activities.

In accounting, insurance costs are reflected in account 76 “Settlements with various debtors and creditors” subaccount 1 “Settlements for property and personal insurance”.

How to draw up a certificate of the amount of entertainment expenses within the limit

Representation expenses within the established limits are taken into account when calculating income tax on the basis of the same primary documents on the basis of which they were accepted for accounting.
If the amount of entertainment expenses in accounting exceeds the limit established for tax purposes, you need to draw up another document - an accounting certificate. In it you need to calculate the amount of entertainment expenses that can be taken into account when calculating income tax.

Accounting for entertainment expenses in tax registers

You can develop a special register for accounting for entertainment expenses for tax purposes or use an accounting register, supplementing it with the necessary details (Article 313 of the Tax Code of the Russian Federation).
In our opinion, it is much more advisable to use the second option, since the additions will be small. The following must be entered in the accounting register:

• the amount of labor costs for the reporting period;
• determination of the maximum amount of entertainment expenses;
• comparing it with actual costs incurred.

The lesser of the two values ​​- the maximum amount of entertainment expenses or the actual expenses incurred - is included in other expenses when calculating income tax.

VAT on hospitality expenses

Typically, the cost of services paid by an organization when receiving representatives of other organizations includes VAT.
You can claim the amount of “input” VAT on entertainment expenses as a tax deduction if the conditions listed in Art. 171 and 172 of the Tax Code of the Russian Federation:

1. entertainment expenses are accepted for accounting;
2. for entertainment expenses there is an invoice indicating the amount of VAT;
3. entertainment expenses have been paid, and the VAT amount is highlighted in the payment document as a separate line;
4. entertainment expenses relate to activities that are subject to VAT.

VAT on excess expenses

Quite often, an accountant is faced with the question of whether it is possible to claim for a tax deduction the amount of “input” VAT that was paid on excess entertainment expenses?
The official position of the Ministry of Finance of the Russian Federation is set out in Letter No. 03-04-11/201 dated November 9, 2004 “On VAT on advertising expenses.” Since advertising expenses are also standardized, therefore, the Ministry of Finance’s opinion regarding “excessive” VAT can be extended to entertainment expenses.

It is possible to recover “input” VAT on standardized expenses only in the amount that corresponds to the amount of entertainment expenses, which, in turn, fits into the standard (clause 7 of Article 171 of the Tax Code of the Russian Federation), i.e., to the part of expenses that taken into account when calculating income tax. VAT, which falls on excess expenses, according to the Ministry of Finance of the Russian Federation, can neither be claimed as a tax deduction nor taken into account as an expense when calculating income tax. In this case, specialists from the financial department refer to clause 49 of Art. 270 Tax Code of the Russian Federation.

In accounting, the amount of “input” VAT on excess entertainment expenses can be included in expenses in the same month in which standard expenses were taken into account. As a rule, the specified amount of VAT is written off from account 19 to the debit of the same account in which entertainment expenses were recorded.
In our opinion, this is not entirely true.

The fact is that amounts of “input” VAT can be included in the costs of production and sale of goods (work, services) only in certain cases (clause 2 of Article 170 of the Tax Code of the Russian Federation), for example:

• entertainment expenses relate to the activities of the organization, which are not subject to VAT;
• the organization is not a VAT payer;
• the organization sells goods (work, services) outside the Russian Federation;
• entertainment expenses relate to transactions that are not subject to value added tax.

Thus, among the listed cases there is no one that would relate to “input” VAT on excess expenses. Consequently, this amount of VAT cannot be attributed to costs associated with production and sales, or included in the initial cost of a fixed asset or intangible asset.
It is much more correct to take into account the amount of “input” VAT on excess expenses as part of the enterprise’s non-operating expenses in subaccount 91 - 2 “Other expenses”.

In accounting, an enterprise can:

• distribute general business expenses between various types of activities in proportion to direct costs, wages of production workers, equipment maintenance costs, etc.;
• write them off completely at the end of each month to the debit of account 90 subaccount “Administrative expenses”.

The main thing is that you need to indicate the chosen method in your accounting policy.
However, the input VAT that relates to these expenses can only be distributed in proportion to the share of the sales value of taxable and non-taxable products in the total cost of goods shipped.
In tax accounting, the amount of VAT not accepted for deduction is taken into account as part of other expenses associated with the production and sale of products (Article 264 of the Tax Code of the Russian Federation).

Example

Medical center 000 "Silhouette" provides medical and cosmetic services to the population. Medical services are not subject to VAT (subclause 2, clause 2, article 149 of the Tax Code of the Russian Federation).

Let's assume that the organization's entertainment expenses amounted to 11,800 rubles, including VAT - 1,800 rubles.
000 “Silhouette” distributes general business expenses in proportion to direct costs. Thus, the provision of medical services accounts for 20% of all expenses, and the provision of cosmetic services - 80%.
The organization pays VAT monthly.

At the end of the month, Silhouette 000 must distribute VAT on rent across two types of activities. Let's assume that in April the share of revenue from the provision of medical services was 30%, and from the provision of cosmetic services - 70%.
The amount of VAT on rent, which is taken into account in its cost, will be:
4,000 rub. 30% 1,200 rub.

The amount of VAT on rent that is deductible will be:
4,000 rub. 1,200 rub. 2,800 rub.

In the accounting of 000 “Silhouette” the following entries are made:

D 26 K 60:	20 thousand rubles. — office rental expenses are reflected;
D 19-2 K 60:	4 thousand rubles. — the amount of VAT has been allocated;
D 60 K 51:	24 thousand rubles. — rent is transferred to the lessor;
D 26 K 19-2:	1,200 rub. — part of the VAT amount is included in the rent;
D 20-1 By 26:	16 thousand rubles. (RUB 20,000 80%) — part of general business expenses is included in the costs of providing cosmetic services;
D 20-2 By 26:	5,200 rub. (20,000 rubles 20% 1,200 rubles) - the other part of general business expenses is included in the costs of providing medical services;
D 68/subaccount “Calculations for VAT” K 19-2:	2,800 rub. — part of the VAT amount is accepted for tax deduction.

In our opinion, it is much more convenient not to include “input” VAT on excess entertainment expenses as part of the costs in the month in which these expenses were taken into account, but to take it into account on account 19 until the end of the year.
At the end of the year, it is necessary to draw up a statement of calculation, which will indicate:

• the amount of entertainment expenses that was taken into account when calculating income tax for the year;
• the amount of “input” VAT that can be claimed for tax deduction in relation to entertainment expenses.

Based on this calculation certificate, you can write off the amount of “input” VAT on entertainment expenses within the established norms from the credit of account 19 to the debit of the budget account (68).
The amount of “input” VAT on excess entertainment expenses should be included in expenses for ordinary activities.

DOCUMENTING

Special attention should be paid to the preparation of documents for entertainment expenses. We are talking about both internal administrative documents and external primary documents (invoices, delivery notes, acts, sales receipts, etc.).
Current regulations do not contain a specific list of documents that must be completed in order to include entertainment expenses in the total costs. Therefore, you have the right to independently determine the procedure for spending funds under this item, their documentation and control.

Internal documentation

Entertainment expenses are documented in the following internal organizational and administrative documents:

1. by order of the head of the organization to incur expenses for these purposes;
2. program of events, composition of the delegation of the invited party, indicating positions;
3. a list of representatives of the organization who take part in negotiations or meetings of the governing body;
4. a list of officials of the organization who have the right to receive funds on account for holding entertainment events;
5. the procedure for issuing funds for entertainment events on account;
6. an estimate of entertainment expenses, in which the expected amount of expenses should be indicated, broken down by specific expense items, and also identify the person who will be responsible for receiving the delegation and for all expenses incurred;
7. an act (report) on the implementation of entertainment expenses, signed by the head of the organization, which must indicate the amounts of entertainment expenses actually incurred, as well as provide links to documents confirming the expenses incurred;
8. a report on spent souvenirs or samples of finished products, indicating what, to whom and how much was awarded;
9. a menu approved by the director of the canteen, if lunch was provided by the enterprise canteen, and the calculation should be made without extra charge;
10. an advance report with the attachment of the originals of the relevant primary documents (KKM checks and sales receipts with a detailed breakdown of the type and quantity of inventory items, invoices from the restaurant, invoices, invoices, sales and purchasing acts, etc.).

The documents listed above are compiled for a specific event. All of them, with the exception of the expense report, do not have unified forms. Therefore, you must develop these documents yourself. It should be taken into account that accounting documents must contain the mandatory details referred to in Art. 9 of the Accounting Law:

• document's name;
• Date of preparation;
• name of the organization from which the document was drawn up;
• content of a business transaction;
• measuring business transactions in physical and monetary terms; the name of the officials responsible for the execution of the business transaction and the correctness of its execution;
• personal signatures of these persons.

In addition, these documents must reflect the following information:

• date of business meeting or reception;
• the location of this event;
• program of events;
• composition of participants from the organization and representatives of another organization;
• purpose of the event;
• the amount of expected expenses.

Note! The purpose of official receptions must be given in accordance with the wording given in paragraph 2 of Art. 264 Tax Code of the Russian Federation.
For example, the purposes of holding an official reception may be the following:

1. Discussion of issues regarding the correction of deficiencies in work under existing contracts.
2. Discussion of issues regarding financing of work under existing contracts or increasing the volume of financing under these contracts.
3. Discussion of the issue of concluding new contracts.
4. Discussion of technical aspects of existing and proposed contracts (technical terms, etc.).

It is recommended that these formulations as standard, as well as other technical aspects of the meeting, be reflected in all internal documents of the organization:

• in the order for organizing an official reception;
• in the program of the meeting;
• in the report on the negotiations.

It is advisable that the wording “conducting negotiations” also appears in the primary documents on entertainment expenses that you receive from counterparties.
To include entertainment expenses in the cost of ordinary activities, it is necessary that the relationship between the official reception and the activities of the enterprise be traced. This can be confirmed:

• concluded contracts;
• signed contracts, protocols of intent;
• business correspondence.

The result of a meeting of the council, general meeting of shareholders, or board of directors should be the adoption of a decision or minutes.

Source documents

After the entertainment events, it is necessary to collect all documents that confirm the expenses incurred for organizing the official reception.

1. Costs associated with holding an official reception (breakfast, lunch or other similar event) of representatives (participants).
   • invoices of standard unified form No. TORG-12;
   • invoices for internal movement, transfer of goods, containers of standard unified form No. TORG-13.

The purchase of products by accountable persons during an official reception is accounted for according to the advance report to account 10 “Materials” subaccount “Products for Representation Purposes”.

These products are written off to cost accounts based on:

These forms were approved by Decree of the State Statistics Committee of the Russian Federation dated December 25, 1998 No. 132.
The write-off of other material assets, such as souvenirs, is formalized by the requirement-invoice of the standard unified form No. M-11, approved by Resolution of the State Statistics Committee of the Russian Federation dated October 30, 1997 No. 71a.

2. Transport provision for reception participants.
   • bilateral Certificate of provision of transport services, signed by the customer and the contractor;
   • invoice for payment of transport services;
   • invoice for the amount of transport services provided;
   • waybills for vehicles providing transport services.
   • waybills for vehicles involved in this event;
   • Advance reports from drivers for the purchase of fuels and lubricants with attached gas station receipts.

One of the types of entertainment expenses is transportation of guests during the negotiations (from the airport to the hotel, from the hotel to the meeting place and back) (Clause 2 of Article 264 of the Tax Code of the Russian Federation).
Transportation of the delegation can be carried out by a specialized organization, with which the receiving party must enter into an appropriate agreement.

After the provision of transport services, the receiving party must receive:

For transport services, the receiving party can use its own transport. In this case, the documents that confirm the fact of representation expenses will be:



3. Buffet service during negotiations and cultural program events.
   • accounts;
   • contracts for the provision of services;
   • order invoices of the standard unified form No. OP-20, acts for food supply by bank transfer of the standard unified form No. OP-22, which are approved by Resolution of the State Statistics Committee of the Russian Federation dated December 15, 1998 No. 132.
   • products of the wine industry (subclass 91 7000);
   • products of the alcoholic beverage, alcohol, and brewing industries (subclass 91 8000).
   • established, that is, stable and sufficiently defined in their content;
   • widely used;
   • not provided for by law;
   • used in any area of ​​business activity.

Buffet service usually includes offering participants tea, coffee, mineral water, juices, etc. during short breaks during negotiations. Expenses for buffet service are documented:

As for alcoholic beverages, the tax authorities have completely opposite opinions regarding them.
For example, the Letter of the Department of Tax Administration of the Russian Federation for the Moscow Region dated March 10, 2004 No. 04-27/03000 states that expenses for alcohol are not included in the list of expenses for entertainment purposes, which are specified in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation, and, therefore, are not taken into account when calculating income tax.

However, the Tax Code of the Russian Federation does not specify what is meant by expenses for breakfast, lunch, dinner or buffet service, while the statement that food products are consumed during these events is indisputable.

According to the All-Russian Classification of Products OK 005-93, which is approved by Decree of the State Standard of Russia dated December 30, 1993 No. 301, food industry products (class 91 0000) also include:

Specialists of the Ministry of Taxes and Taxes of the Russian Federation believe that an organization’s expenses for alcohol and tobacco products during an official reception can be included in entertainment expenses, which are taken into account for profit tax purposes, but only in the amounts provided for by business customs during business negotiations (see Letter from the Ministry of Taxes and Taxes RF dated December 15, 2003 No. 02-5-10/127).
The Ministry of Finance of the Russian Federation adheres to a similar position (see Letter of the Ministry of Finance of the Russian Federation dated 06/09/2004 No. 03-02-05/1/49).
However, not a single regulatory document in the field of taxation defines the concept of “business customs,” and certainly does not establish standards for the consumption of alcoholic beverages during official receptions.

The definition of this concept is contained in paragraph 1 of Art. 5GCRF.

“A business custom is an established and widely used rule of conduct in any area of ​​business activity that is not provided for by law, regardless of whether it is recorded in any document or not.”
Thus, rules of conduct turn into business customs if they have the following characteristics:

Accordingly, the consumption of alcoholic beverages at official receptions is a business custom. But this issue must be approached carefully, from the position of reasonable sufficiency.
Although tax legislation has not established any regulation of the use of alcoholic beverages, the amount of alcohol consumed, in our opinion, should be within reasonable standards for the consumption of alcoholic beverages, for example, no more than 50-100 g of vodka or cognac per person, no more than 0.3 - 0.5 liters of beer, etc.
You can develop and approve standards for the consumption of alcoholic beverages during business negotiations per person per day, and then take into account the cost of alcohol as a separate cost item for buffet or restaurant services for each official reception, depending on the number of participants in the official reception.

4. Payment for the services of translators who are not on staff of the organization.
These expenses are confirmed by the contract and the service acceptance certificate.

5. Visiting cultural and entertainment events.

Attending cultural and entertainment events can be confirmed by an invoice for the purchase of entrance tickets.

How to take into account entertainment expenses when combining simplified taxes and UTII

In accounting - as usual.
When calculating the single tax, they are not taken into account. When calculating UTII, they do not matter.

I approve Ivanov I.I.
(signature)
General Director of Smile LLC
(date of approval)

Act
on write-off of entertainment expenses
to the official reception of representatives
JSC "Smile" 01/05/2005

Type of expenses	Date of origin	Amount, including VAT, rub.	Base
Cost of a formal dinner in a restaurant			Order-invoice No. 28 dated 01/05/2005 from LLC “Tavern of Three Peskars”
Buffet service			Check KKM LLC "Auchan" No. 2146 dated 01/05/2005
Fare			Agreement for the provision of transport services No. 894 dated 12/30/2004, invoice No. 12 dated 01/05/2005 from Poputchik LLC with the attachment of waybills"

L.A. Elina, economist-accountant

Entertainment expenses: going out for business

The Letters from the Ministry of Finance mentioned in the article can be found: section “Financial and personnel consultations” of the ConsultantPlus system

To maintain existing business connections, as well as to establish new ones, companies often organize meetings with business partners - be they suppliers or clients. When accounting for the costs of such meetings, the most important thing is proper documentation.

We will consider accounting only using the accrual method.

Simplified people cannot take into account entertainment expenses for tax purposes, since they are not included in the closed list of expenses Letter of the Ministry of Finance dated October 11, 2004 No. 03-03-02-04/1/22.

We determine which expenses are classified as hospitality

For tax purposes, hospitality expenses include those expenses that are associated with official reception and/or service. subp. 22 clause 1, clause 2 art. 264 Tax Code of the Russian Federation:

• individuals and representatives of organizations participating in negotiations in order to establish and/or maintain mutual cooperation Letters of the Ministry of Finance dated 06/03/2013 No. 03-03-06/2/20149, dated 05/27/2009 No. 03-03-06/1/351;
• participants who arrived at meetings of the board of directors (board) or other governing body of the company.

WE TELL THE MANAGER

From a tax point of view it will be safer if nonresidents representatives contractors will pay for their own travel and accommodation. If such expenses are paid by the inviting company, the tax authorities will probably not allow them to be taken into account as entertainment expenses.

An official reception means breakfast, lunch, dinner or other similar event.

And by service we mean:

• delivery of participants to the venue of the entertainment event and back (however, it cannot be taken into account as entertainment costs for payment of air and railway tickets and costs associated with the delivery of those arriving at the event from the station to the hotel, as well as accommodation costs Letter of the Federal Tax Service dated April 18, 2007 No. 04-1-02/306@);
• buffet service during negotiations. The Tax Code does not contain a list of foods and drinks, the costs of which cannot be included as entertainment expenses. Therefore, expenses for alcoholic drinks purchased for official events can also be taken into account as part of entertainment expenses in Letter of the Ministry of Finance dated March 25, 2010 No. 03-03-06/1/176; Resolution of the Federal Antimonopoly Service dated January 15, 2013 No. A55-14189/2012;
• payment for the services of translators who are not on staff of the organization to provide translation during entertainment events.

Representation expenses can be taken into account even if, at the end of the meeting, the desired agreement or contract is not signed. After all, the Tax Code does not make the possibility of recognizing entertainment expenses dependent on the effectiveness of the event. clause 2 art. 264 Tax Code of the Russian Federation; Resolution of the Federal Antimonopoly Service of August 27, 2009 No. A48-2871/08-18; FAS UO dated December 23, 2008 No. Ф09-8529/08-С2.

It is better not to call expenses aimed at increasing the loyalty of clients, suppliers or other organizations and individuals, but not strictly meeting the definition of entertainment expenses given in the Tax Code, as entertainment expenses in your accounting. Resolution of the Federal Antimonopoly Service of the Moscow Region dated May 23, 2011 No. KA-A40/4584-11. It’s safer to take them into account as other expenses. subp. 49 clause 1 art. 264 Tax Code of the Russian Federation. This approach will not only prevent possible disagreements with inspectors, but will also allow you to take into account your reasonable expenses without any restrictions in tax accounting. For example, expenses for tea, coffee and sweets that the secretary treats to clients visiting the office cannot be classified as entertainment expenses. Letter of the Ministry of Finance dated May 12, 2010 No. 03-03-06/1/327.

Sometimes organizations take into account the costs of corporate holidays, for example New Year, March 8 or February 23, as part of entertainment expenses. However, such expenses are related to the entertainment of employees, so they cannot be taken into account when calculating income tax, either as entertainment expenses or as other other expenses. clause 2 art. 264 Tax Code of the Russian Federation; Letter of the Ministry of Finance dated September 11, 2006 No. 03-03-04/2/206.

But if representatives of counterparties were invited to an entertainment event and the purpose of its holding is to improve business ties and maintain cooperation, in court it will be possible to insist that the costs of holding such an event are representative Resolution of the Federal Antimonopoly Service of Ukraine dated January 19, 2012 No. F09-9140/11. But the risk of a dispute with the inspectorate still remains.

The meeting place can be changed

The location of the official reception can be chosen according to your taste. This could be your office, a business center, a restaurant or a cafe. But you should not give the inspectors any reason to doubt that the meeting was organized for business purposes. For example, inspectors may have claims regarding the costs of organizing a meeting in a theater, sauna, water park, billiards club or bowling center (especially if they do not have restaurant services).

The timing of negotiations does not in any way affect the tax accounting of entertainment expenses. Negotiations can be held after hours, and even on weekends.

We prepare supporting documents

The Tax Code does not have a strict list of documents that confirm hospitality expenses. According to the Ministry of Finance, t will help confirm them Letter of the Ministry of Finance dated April 10, 2014 No. 03-03-RZ/16288:

• primary documents confirming the cost of purchased goods and services used for entertainment events, in particular those attached to the advance report if the employee paid in cash (contracts, bills, invoices, acts, invoices, cash register receipts, sales receipts, other payment documentation);
• a report (approved by the manager) on the entertainment event and the expenses for it. It would not be amiss to indicate its results. This could be, for example, either signing a protocol of intent to enter into an agreement in the future, or simply establishing a trusting business relationship.

The Tax Service agrees with the Ministry of Finance and clarifies: any document can be drawn up, the main thing is that its content should indicate that specific documented costs of the organization are associated with the holding of entertainment events Letter of the Federal Tax Service dated 05/08/2014 No. GD-4-3/8852.

Previously, the Ministry of Finance insisted that an additional order from the head on holding a hospitality event and an estimate of entertainment expenses in Letters of the Ministry of Finance dated March 22, 2010 No. 03-03-06/4/26, dated November 13, 2007 No. 03-03-06/1/807. However, as part of improving tax administration, the number of documents confirming entertainment expenses has been reduced to clause 10 section IV Plan, approved. Government Order No. 162-r dated 10.02.2014.

It’s still more common to draw up a report. Its shape is arbitrary. We offer you a sample of such a report.

I APPROVED
General Director of Krasnaya Smorodinka LLC

Report on the official reception of representatives of Lyubimye Sady LLC

The official reception of representatives of Lyubimye Sady LLC took place on April 21, 2014. The venue for the negotiations was Moscow, Leninsky Prospekt, 38, banquet hall of the Sputnik restaurant.

Present at the reception:
- representatives of Lyubimye Sady LLC - 7 people, including General Director Yu.I. Velebuzhsky;
- representatives of Krasnaya Smorodinka LLC - 8 people, including General Director E.V. Sleiman. There is no need to list those who attended the official banquet. There are no such requirements in the Tax Code. But in the report on the official banquet it would be useful to indicate the number of representatives of counterparties and potential clients present

Following the official reception, a contract was signed for the supply of new products - Jubilee juice. An additional agreement to the current contract No. 1168/2013 on the supply of products was also concluded.

The total amount of expenses for holding a representative event amounted to 47,000 rubles, including:
- for renting a banquet hall - 10,000 rubles;
- for the purchase of food and drinks - 37,000 rubles.

A copy of the cash receipt for restaurant services is attached. If the expenses for the entertainment event were paid in cash, the original documents confirming such payment (cash register receipt, strict reporting form) must be attached to the advance report of the employee who paid the expenses for the event in cash

Tax accounting: standard for profit and VAT

Tax accounting of entertainment expenses consists of three stages.

STAGE 1. We calculate entertainment expenses for the current month (quarter).

The date of recognition of entertainment expenses is determined:

• <если>the event was paid for by bank transfer - either as the date of approval of the report on the representative event and clause 1 art. 272 Tax Code of the Russian Federation;
• <если>entertainment expenses were paid by the employee in cash - whichever is the later of the two dates clause 1, sub. 5 paragraph 7 art. 272 Tax Code of the Russian Federation:

• <или>date of approval of the report on the event;
• <или>date of approval of the advance report by the manager.

STAGE 2. We find out what part of entertainment expenses can be taken into account in the current period based on the standard - 4% of accrued labor costs (listed in Article 255 of the Tax Code of the Russian Federation) for the current reporting/tax period clause 2 art. 264, paragraph 4 of Art. 272 Tax Code of the Russian Federation.

Please note that both the amount of entertainment expenses and the amount of labor costs during standardization must be determined on an accrual basis from the beginning of the year clause 7 art. 274, Art. 315 Tax Code of the Russian Federation. And if some part of the entertainment expenses is not taken into account in one quarter, with a high degree of probability it can be (at least partially) taken into account in the next quarter of the same calendar year.

STAGE 3. We accept for deduction VAT on entertainment expenses taken into account within the standard as expenses of the current period.

If the sellers presented input VAT for all entertainment expenses, then the formula for calculating the part of the tax that can be presented for deduction is as follows (note that all amounts are taken on an accrual basis from the beginning of the year).

But this happens quite rarely. And if for some costs the sellers presented input VAT, but for others there was no input tax, then it is more profitable to take a different route. Proceed from the fact that when calculating income tax within the limits of the standard, you take into account, first of all, those expenses that are accompanied by input VAT. The Tax Code does not prohibit this approach. The main thing is that the tax to be deducted relates to expenses taken into account when calculating income tax. clause 7 art. 171 Tax Code of the Russian Federation.

If the amount of entertainment expenses is within the standard more the amount of expenses for which the seller has submitted input VAT, then the entire input VAT on entertainment expenses can be deducted.

In a different situation An estimate will be required to determine the amount claimed for deduction. Let's give an example that is suitable in most cases. Again, all amounts in it are considered a cumulative total from the beginning of the year.

Since entertainment expenses must be normalized on an accrual basis from the beginning of the year, it may turn out that you can deduct VAT on such expenses partially in one quarter, and partially in another (when the expenses cease to be excess for profit tax purposes). In particular, due to the fact that during the year the wage fund increases and it becomes possible to take into account the additional amount of standardized costs in “profitable” expenses Letter of the Ministry of Finance dated November 6, 2009 No. 03-07-11/285.

Attention

VAT on excess entertainment expenses can neither be deducted nor taken into account in tax expenses.

If, at the end of the year, part of the input VAT on entertainment expenses that do not fit into the “profitable” standard remains unclaimed for deduction, then in tax accounting such an amount of VAT cannot be taken into account as an independent expense. clause 1 art. 170, Art. 270 Tax Code of the Russian Federation.

To standardize entertainment expenses and calculate deductible VAT, it is better to create a tax register-calculation. For example, he might be like this.

LLC "Red Currant"
form approved By Order No. 25 dated December 20, 2013

Register-calculation of hospitality expenses
for 20 14 year The form of the proposed register provides for the rationing of entertainment expenses throughout the year. However, it must be filled out at the end of each quarter for those income tax payers whose reporting periods are quarter, half-year and 9 months.
If the reporting periods are a month, 2 months, and so on, the column in the accounting register should be larger (the amounts of standardized entertainment expenses should be calculated at the end of each reporting period and at the end of the year) Art. 285 Tax Code of the Russian Federation

Line no.	Index	Amount, rub.
		I quarter	Half year	9 months	Year
1	Amount of expenses for the last quarter of the current reporting/tax period	240 000	90 000	30 000
1a	Including the amount of expenses for which the seller claimed VAT	160 000	40 000	10 000
2	The amount of expenses for the reporting/tax period, calculated on an accrual basis from the beginning of the year (page 1 + page 2 for the previous reporting period)	240 000	330 000	360 000
2a	Including the amount of expenses for which the seller presented input VAT (page 1a + page 2a for the previous reporting period)	160 000	200 000	210 000
3	Amount of input VAT related to entertainment expenses of the last quarter of the current reporting/tax period	28 800	7 200	1 000
4	Amount of input VAT related to hospitality expenses of the current year (page 3 + page 4 for the previous reporting period)	28 800	36 000	37 000
5	The amount of labor costs calculated on an accrual basis from the beginning of the year	3 000 000	3 900 000	6 000 000
6	The standard for entertainment expenses is the maximum value accepted for tax purposes (page 5 x 4%)	120 000	156 000	240 000
7	The amount of expenses for the reporting period accepted for tax purposes (the lower value of the indicators reflected on page 6 and page 2) The amounts of entertainment expenses are included in the calculation of the indicator of line 040 “Indirect expenses - total” of Appendix No. 2 to sheet 02 of the income tax return for the corresponding reporting/tax period	120 000	156 000	240 000
8	Amount of expenses accepted for tax purposes in the last quarter (page 7 – page 7 for the previous reporting period of the current year)	120 000	36 000	84 000
9	Amount of input VAT accepted for deduction from the beginning of the year: <если>page 2a ≤ page 7, then page 4; <если>page 2a > page 7, then page 4 x page 7 / page 2a	21 600	28 080	37 000
9a	The amount of input VAT accepted for deduction in the last quarter (page 9 – page 9 for the previous reporting period)	21 600	6 480	8 920

The person responsible for compiling the register, clause 20 of PBU 10/99. They are reflected in account 44 “Sales expenses” or account 26 “General business expenses”:

• <или>on the date of approval of the advance report - if the employee reported on the cash spent after the entertainment event;
• <или>on the date of completion of the event and approval of the report on it - if the employee reported expenses before this date.

WE TELL THE MANAGER

I'll meet you better with counterparties not to be organized in theaters, saunas and various entertainment venues, which do not have restaurant service. The inspectors will consider the costs of such a meeting unreasonable and will not allow them to be taken into account when calculating income tax.

In a situation where an organization applies PBU 18/02 in accounting and part of the entertainment expenses exceeds the tax standard, a deferred tax asset will have to be accrued (debit to account 09 “Deferred tax assets” - credit to account 68 “Calculations for taxes and fees”, subaccount “ Income tax calculations"). If in the following quarters of the same calendar year it becomes possible to recognize in tax accounting an additional part of the expenses that were previously above the norm, then the deferred tax asset will need to be reduced by reverse entry.

If at the end of the year there remains a portion of expenses that cannot be recognized in tax accounting, you can deal with it as follows:

• <или>repay the balance of OTA by posting to the debit of account 68 and the credit of account 09 and for the same amount accrue a permanent tax liability on the debit of account 99 “Profits and losses” (sub-account “Permanent tax liability”) in correspondence with the credit of account 68 clause 7 PBU 18/02;
• <или>write off the balance of ONA to account 99 “Profits and losses” (as upon disposal of the asset/liability for which it was accrued due to the fact that the amount written off will not affect the taxable profit of both the current and subsequent reporting periods) clause 17 PBU 18/02. This method is simpler, but it is not entirely correct (since there is no disposal of the asset/liability as such). However, the final amount of income tax according to accounting data will be the same as with the previous posting option.

When writing off at the end of the year the amount of VAT related to excess entertainment expenses as expenses, it is necessary to reflect a permanent tax liability in the debit of account 99 and the credit of account 68 (sub-account “Calculations for income tax”) clause 7 PBU 18/02.

If management meetings with representatives of counterparties are not formalized as official entertainment events, inspectors will likely regard them as personal meetings of the director. And reimbursement of expenses for such personal meetings is not taken into account as entertainment expenses. Letters of the Ministry of Finance dated November 16, 2009 No. 03-03-06/1/759, dated November 1, 2010 No. 03-03-06/1/675. In addition, reimbursement to the manager of his personal expenses should be considered as payment of income to him. Art. 209 Tax Code of the Russian Federation. This means that the organization must calculate personal income tax from this amount (it must be withheld from other paid income) and calculate insurance premiums.

Representative meetings and business negotiations are one of the main tools for an organization’s interaction with existing business partners and potential clients. Carrying out such meetings, as a rule, requires expenses, which are usually called entertainment expenses. In the article you will learn what expenses are classified as entertainment expenses, how they are reflected in accounting entries and what documents are drawn up.

Entertainment expenses mean expenses for services and official receptions of representatives of other organizations (current and potential business partners). The purpose of such events is to conduct negotiations to establish and maintain mutual cooperation.

In accounting, expenses can be classified as representative expenses if:

• the organization held an official reception for representatives of other companies, as a result of which the organization incurred expenses;
• the company incurred travel expenses in connection with the organization of a representative meeting;
• the list of expenses for holding an event includes the cost of buffet service (buffet, outdoor banquet, etc.);
• the organization held an official meeting with representatives of a foreign company, and therefore a translator was hired.

It is important to know that when holding official meetings, the organization cannot compensate business partners for the expenses incurred by them for accommodation, visas (for representatives of non-resident companies), and also transfer products of its own production as souvenirs.

Reflection of entertainment expenses in transactions

In accounting, expenses for representative meetings are classified as expenses for ordinary activities in the amount of actual expenses that were incurred by the enterprise during the reporting period.

Let's look at examples of how expenses for entertainment events are reflected in accounting.

Entertainment expenses during a business trip

Employee of Magnit LLC Sviridov K.L. was sent on a business trip to Saratov to conduct negotiations with representatives of Metallist LLC. The purpose of the negotiations is the joint release and promotion of products. According to the manager’s order, Sviridov pays the costs of the business meeting.

Expenses for the event (lunch in a restaurant) amounted to 7,450 rubles, VAT 1,136 rubles.

In the accounting of Magnit LLC, entertainment expenses were reflected in the following entries:

Representative meeting with a cultural and entertainment event

In October 2015, Fialka LLC organized a business meeting with business partners, the program of which included lunch at the Parus restaurant and a visit to the theater. To hold the event, S.R. Kataev, an employee of Fialka LLC. funds were issued against the report in the amount of 74,000 rubles.

Actual expenses for holding a business event amounted to RUB 57,200, including:

• lunch at the Parus restaurant 32,000 rubles, transport services for delivering partners to the restaurant 5,200 rubles;
• tickets to the theater 14,500 rubles, transport services for delivering partners to the theater 5,500 rubles.

The remainder of the unused funds was returned by Kataev to the cash desk of Fialka LLC.

The accountant of Fialka LLC made the following entries in the accounting:

Dt	CT	Description	Sum	Document
71	50	Kataev S.R. funds received for reporting	74,000 rub.	Account cash warrant
44	71	Entertainment expenses for lunch and a visit to the theater are taken into account (RUB 32,000 + RUB 14,500)	500 rub.	Advance report, Negotiation report, Entertainment expenses report, Restaurant invoice
50	71	The balance of unused funds was returned by Kataev to the cash desk (74,000 rubles - 500 rubles)	27,500 rub.	Receipt cash order
44	76	The transport company has issued an invoice for delivery services (RUB 5,200 + RUB 5,500)	10,700 rub.	Invoice
76		Funds transferred to pay for delivery services	10,700 rub.	Payment order

It should be noted that, according to the Tax Code of the Russian Federation, expenses for holding a cultural event (a visit to the theater is 14,500 rubles), as well as associated transportation costs (5,500 rubles) are not recognized as entertainment expenses in tax accounting.

How to arrange hospitality expenses - an example of a document can be found in our article. In addition, we will consider through which sources these expenses can be confirmed and which of them the financial department requires to be used.

Why are representation expenses processed?

Entertainment expenses (PR) are allocated to a separate category of enterprise costs in accordance with clause 2 of Art. 264 Tax Code of the Russian Federation. These could be costs:

• for the implementation of a business event of a representative nature;
• payment for transport and catering services ordered by the company from third-party organizations or individual entrepreneurs as part of a business event;
• payment for translation services provided by a third-party company or individual entrepreneur, if it was required during a business event.

PR can be applied in order to reduce the tax base of an enterprise operating on special equipment. But not completely, but only within 4% of the amount of labor costs in the corresponding reporting period.

In order to take advantage of this opportunity, the company will need to confirm that:

• expenses are representative expenses (according to Article 264 of the Tax Code of the Russian Federation);
• the corresponding expenses are documented and justified (this requirement is established in paragraph 1 of Article 252 of the Tax Code of the Russian Federation).

Certification of both facts can be done through a number of documents. Let's study their specifics.

How to arrange entertainment expenses in 2018

In accordance with paragraph 1 of Art. 252 of the Tax Code of the Russian Federation, any costs that are planned to be used to reduce the tax base must be documented. In the provisions of Art. 264 of the Tax Code of the Russian Federation, in which PR is defined as a separate category of expenses, as well as in other federal regulations, there are no lists of documents through which the corresponding expenses can be approved.

Thus, in letter dated November 13, 2007 No. 03-03-06/1/807, the Ministry of Finance recommended that taxpayers confirm the PR through such sources as:

• order to hold a representative event;
• company estimate for PR;
• PR report;
• primary supplementary to the report.

In letters dated 01.11.2010 No. 03-03-06/1/675 and dated 22.03.2010 No. 03-03-06/4/26, issued by the department, it was also recommended to use the act of relevant costs as a source confirming the PR .

In one of the latest letters explaining this issue (dated April 10, 2014 No. 03-03-RZ/16288), the Ministry of Finance expressed the opinion that it is enough to confirm the PR only with the help of:

• report;
• primary sources confirming the correctness of the data presented in the report.

In turn, the Federal Tax Service of Russia also considers it acceptable to use a very narrow range of sources when drawing up PR (this conclusion can be reached by reading the letter dated 05/08/2014 No. GD-4-3/8852), namely:

• primary accounting documents (invoices, contracts, acts);
• any other types of primary products that meet the criteria set out in paragraph 2 of Art. 9 of the Law “On Accounting” dated December 6, 2011 No. 402-FZ (one of such documents may be the same report).

List of supporting documents

How to arrange entertainment expenses taking into account the above instructions from the financial and tax authorities? Summarizing the recommendations set out in their letters, we will compile a list of sources that, along with primary documentation received from suppliers, can justify the amount of PR. This:

• order from the director of the company to conduct a business event;
• PR estimate;
• expense report;
• act on write-off of PR.

You can learn more about the listed documents from the articles:

• “Estimate for entertainment expenses - sample” ;
• “We are drawing up a contract for entertainment expenses - sample” .

In addition, if a company regularly holds business events, then the main document for drawing up a PR may be an internal corporate regulation on entertainment expenses. It will be a local regulatory act regulating the procedure for accounting for relevant expenses and reflecting information about them in various documents.

You can learn more about the features of using the PR provision by reading the article “We are drawing up a regulation on entertainment expenses - a sample” .

Many companies, when accounting for PR within the framework of internal corporate management accounting, prefer to use all types of documents listed above when processing these expenses. This may be due to established management accounting standards, which require the most detailed disclosure of information about PR carried out by responsible employees of the enterprise.

• business event report;
• primary

Let us consider the features of compiling these documents in more detail.

We prepare entertainment expenses: report

The PR report may include information:

• about the purpose of the business event;
• actual number of visitors;
• the actual costs of the company during the event;
• primary document confirming the costs reflected in the report.

Many companies supplement the report with another document - a program for a representative event. At the same time, the letter of the Federal Tax Service of Russia dated April 12, 2007 No. 20-12/034115 expressed the opinion that this program should be included directly in the report. But this recommendation is not always applied in practice, since the corresponding program may, firstly, be too voluminous to be combined into one document with a report, and secondly, in terms of meaning it may not be optimally combined with it.

Let's consider what the structure of a business event program might be.

Event program and sample for filling it out in 2018

The document may reflect:

• information about the purpose of the business event;
• date, place of its holding;
• information about the number of organizers and guests;
• lists of the company’s counterparties with whom contracts have been concluded (or planned to be concluded) for the provision of services as part of events, including those for which payment is made by the PR;
• information about the persons responsible for the official event;
• information about specific stages of the entertainment event.

You can view a sample program for a representative event on our website.

Primary requirements

In addition to the PR report, as well as the program that complements it in many cases, confirmation of the corresponding expenses is carried out through various primary sources.

They can be classified into 2 main categories:

• contractual primary documents (agreements, acts, invoices - with contractors providing services as part of entertainment events);
• internal accounting documents (such as a report on a business event).

All types of primary equipment must comply with the general requirements reflected in paragraph 2 of Art. 9 of Law No. 402-FZ, and contain:

• Name;
• date of document preparation;
• company name;
• information about the economic fact being taken into account;
• information about the measurement value of the corresponding fact, the units of this measurement;
• information about persons related to the occurrence of the relevant fact, signatures of these persons.

The primary report is compiled at the moment of occurrence of the economic fact taken into account or, in extreme cases, immediately after its occurrence (Clause 3, Article 9 of Law No. 402-FZ). The head of the company must approve the forms of primary accounting used in the organization in the accounting policy (clause 4 of PBU 1/2008).

Results

In order to use entertainment expenses to reduce the tax base, the company must register them correctly. For these purposes, the financial department of the Russian Federation prescribes the use of documents such as a report on a representative event, as well as primary documentation supplementing it. The most important part of this report may be the program of the event (however, it can also be issued as a separate document).

You can learn other useful information about hospitality expenses in the article

Entertainment expenses are the expenses of an organization for official receptions and business meetings that are carried out for the purpose of mutually beneficial cooperation.

Since 2002, entertainment expenses also include all company expenses that are not related to the production of goods (provision of services) and their sale. This type of expense is devoted to paragraph 2 of Chapter 264 of the Tax Code of the Russian Federation.

According to the Resolution of the Federal Antimonopoly Service of the West Siberian District dated 01.03.2007 No. F04-9370/2006 (30552-A81-27), the court indicated that entertainment expenses can also include those expenses that are directly in paragraph 2 of Art. 264 of the Tax Code of the Russian Federation are not mentioned. It is easy to understand that the list of entertainment expenses is open.

Criteria for recognition of entertainment expenses

To justify these expenses for income tax purposes, they must meet certain criteria:

• Expenses are recognized as justified and documented expenses incurred by the taxpayer.

Justified expenses mean economically justified expenses.

Documented expenses mean expenses supported by documents drawn up in accordance with the legislation of the Russian Federation. Any expenses are recognized as expenses, provided that they are incurred to carry out activities aimed at generating income.

Documentation of entertainment expenses

There are no standardized forms for recording such expenses. Each organization develops its own convenient forms, some of which are mandatory:

• Order for holding a representative event. The order must indicate the date and place of the event, the purpose of the event, the name of the counterparty organization, a list of persons responsible for conducting and ensuring this event, and the employee who is entrusted with control.

• Representative event program. This program is attached to the order; it must reflect the main stages and dates of official reception. The program is approved by the head of the organization.

• Estimate for a representative event. It is advisable to write out the estimate for each event separately. Must be approved by the manager. The estimate usually breaks down line by line: transportation costs, buffet service, costs for purchasing bouquets and souvenirs.

• Event report. The report must reflect the date and location of the event, the purpose, the name of the partners, the participants of the event by name with their positions and the result that was achieved during the event.

• Act on write-off of entertainment expenses. And the act must reflect the exact amount (down to kopecks), according to the expenses incurred. The act is signed by the chief accountant and the head of the organization.

In addition to drawing up internal documents, it is necessary to collect all receipts and documents confirming the amount of expenses incurred.

Tax accounting of entertainment expenses

In order to reduce income tax (as part of other expenses), the rate of recognition of entertainment expenses (this cost item is normalized) should not exceed 4% of labor costs for the reporting tax period in which the event took place.

“Input” VAT is deducted in the amount of recognition of entertainment expenses for profit tax accounting. If in subsequent quarters of the current year the remaining portion of entertainment expenses falls within the standard, then VAT on it can also be deducted.

What cannot be classified as entertainment expenses

Please note what expenses cannot be classified as entertainment expenses:

• Lunches in boarding houses, sanatoriums, and entertainment (except bars and restaurants) places;

• Processing visa documents for your employees;

• Costs of decorating holiday events (for example, New Year, March 8, February 23), as well as employee anniversaries;

• The amount of entertainment expenses in excess of the norm.