Representation costs (entertainment)

Representation or entertainment costs cover meals with clients, hospitality at events, gifts to business partners and similar spending whose purpose is to maintain business relations rather than to produce goods or services directly. Tax laws treat them with suspicion because the private benefit is hard to separate from the business purpose.

Rules vary from full non-deductibility for income tax, as in Czechia and Poland, to partial deductibility with a percentage cap, as in Germany, France, Italy or the Netherlands. Input VAT on such costs is typically blocked as well. Small promotional gifts marked with the company logo under a value limit are often the exception. The safest practice is to record who attended and why on every receipt, because the burden of proof is on the business. Kontevia keeps a separate category for these costs so they can be excluded from the tax base.