What Tax-Deductible Expenses Are
Only expenses where, in the event of an audit, the company can prove to the tax authority that the event aimed to generate, secure and maintain taxable income under Section 24(1) of the Czech Income Tax Act are tax-deductible. That connection is what decides it.
So write down why you're holding the event and what it should bring the company in advance, not during the audit.
What Documents to Prepare
Prepare the event program and a list of participants, and describe the event's goal in writing: deeper employee motivation, better performance and better communication across the whole team.
Workshops and training sessions focused on deepening employees' knowledge and skills hold up best with the tax authority.
In our view, employee accommodation and any rentals connected with a team-building event can also be claimed as a tax-deductible expense.
Refreshments for employees at a corporate event normally can't be claimed unless they're directly connected with the team-building event.
Marketing Costs
If you hold a similar event for your business partners, the costs can be treated as a marketing expense, meaning a tax-deductible advertising and promotion expense.
For a family day, an open house or a company party, the costs of preparing and organizing the event generally aren't tax-deductible.
But if you give the tax authority sound reasons why it's a marketing expense for advertising, promotion and raising awareness of the company, which ultimately leads to taxable income, you can claim these costs.
Corporate Events and VAT
For events for business partners, what matters is how you classify the expenses. If you report them as entertainment expenses, you're not entitled to deduct input VAT, and those expenses aren't tax-deductible.
It's better to classify these costs as advertising expenses. Decide on the classification while you're still planning the event, and use the same description of its purpose in the order and on the supplier's invoice. It's hard to fix after the fact.
Invoicing Foreign Companies and VAT
If the program is ordered by a VAT-registered company based in another EU member state, we invoice without VAT under the reverse charge mechanism. The client accounts for VAT in their own country under local rules.
Companies based outside the EU are always invoiced with Czech VAT.
Tax-Deductible Corporate Programs
Before you order the event, write one specific work-related purpose for the program into the brief; otherwise it won't hold up as a tax-deductible expense. The easiest events to defend are those booked as training, sales promotion or an advertising event, consistently in the brief, the order and the invoice.
Choose a format whose outcome you can document after the event, for example a workshop with an attendance sheet and minutes, or a communication-focused team program with a short evaluation. We also host and run our programs in English, so the same approach works for international teams.
Overview by Event Type
The overview summarizes the usual treatment of individual items. For each event, create a folder with the program, attendance sheet, order and invoice, all describing the same purpose. The final classification depends on the specific event and on what you can document.
- Training and workshops for employees: usually deductible if you document the educational goal.
- Team building focused on performance and communication: deductible with a written justification and a participant list.
- Accommodation and rentals connected with the event: deductible, in our view.
- Refreshments for employees: normally not deductible unless directly connected with the program.
- Partner events booked as entertainment: not deductible and no input VAT deduction.
- Partner events booked as advertising: deductible with a documented marketing purpose.
- Family days, open houses and parties: generally not deductible, except with a documented marketing purpose.
Frequently Asked Questions
When is team building a tax-deductible expense for a company? When the company can show the tax authority that the event aimed to generate, secure and maintain taxable income. Keep the event program, the participant list and the written goal, such as improving performance or team communication.
Can I deduct VAT on a corporate event for business partners? If you report the expenses as entertainment, you're not entitled to a VAT deduction, and the expenses aren't tax-deductible. It's better to classify them as advertising expenses, provided you can document the marketing purpose.
Can refreshments at a team-building event be claimed as a tax-deductible expense? Normally not, unless they're directly connected with the team-building event. In our view, accommodation and rentals connected with the event can be claimed.
Is a company party or family day tax-deductible? Generally not. The exception is when you can show the tax authority that the event served as advertising and promotion of the company, leading to taxable income.
How do you invoice team building for a foreign company? A VAT-registered company from another EU country is invoiced without VAT under the reverse charge mechanism and handles VAT in its own country. Companies based outside the EU are always invoiced with Czech VAT.
