Can the purchase of food products be included in expenses?

Every entrepreneur sooner or later faces the dilemma of which expenses can be classified as tax-deductible costs. Inexperienced taxpayers often do not know whether and how to allocate specific costs. When an entrepreneur reaches for their wallet to pay for coffee and biscuits for employees or a company event, the natural question arises: can these expenses be included as business costs? The answer, as is often the case in tax law, is: “it depends”. It should be remembered that not every purchase will necessarily be treated by the tax authorities as a business-justified expense. So, is it worth the risk, and where is the line between a cost and a whim?

What are tax-deductible costs?

Referring to the regulations, we can establish that according to Article 22 of the PIT Act, tax-deductible costs are expenses incurred to generate income or to maintain or secure the source of income. The legislator also points out expenses that do not constitute tax-deductible costs – among these are, inter alia:

• Purchase of land – buying land is not a deductible cost;
• Value of own work – work performed by the owner or their family is not a deductible cost;
• Full depreciation of an expensive car – depreciation of a car’s value exceeding PLN 150,000 (or PLN 225,000 for electric vehicles) is not a deductible cost;
• Donations – donations made are not deductible costs, except for food donated for charitable purposes;
• Fines and penalties – imposed fines or penalties are not deductible costs.

In theory, this sounds simple – after all, the legislator clearly indicated what constitutes a tax-deductible cost and what does not. Unfortunately, in practice, the matter becomes more complicated. Recognising a given expense as a tax-deductible cost may require proper justification in case of an audit, and when it comes to food products, the matter is by no means straightforward.
 

Food purchases as business costs – when is it possible?

Purchasing food products can be recognised as a tax-deductible cost, but only in specific situations. The key factor here is how these products are used in the business activity.
If an entrepreneur provides food products such as water, tea, coffee, etc. for their employees during work, this can be recognised as a tax-deductible cost. This results, among others, from health and safety regulations, which indicate that the employer is obliged to provide all employees with drinking water or other beverages during working hours, and since this is an obligation, expenses related to it should constitute tax-deductible costs.

Unfortunately, expenses on food products may be regarded as representation expenses, i.e., expenses that do not constitute tax-deductible costs. If the purchased products are aimed at improving the company’s image (e.g., an elaborate reception at a meeting), tax authorities may, as practice shows, challenge their classification as deductible costs.

This position has also been repeatedly emphasised by the Director of the National Tax Information. For instance, in a letter this year, it was indicated that:
“Recognition of a given expense as a tax-deductible cost is possible only when it is beyond all doubt, based on properly and reliably documented events, that it is a purposeful and rationally justified expense… Among the expenses not recognised as tax-deductible costs, the legislator listed… representation costs, in particular those incurred for catering services, purchase of food and beverages, including alcoholic beverages… The concept of representation does not include those activities undertaken in relation to one’s own employees… providing food products limits breaks for meal preparation, allowing employees to focus on their assigned tasks. Shared consumption supports integration, exchange of ideas, and creation of new solutions. It improves relationships within the company. Providing snacks causes employees to feel valued and that they are an important link in the company’s structure. This strengthens their attachment to the company. Benefits aim to raise work standards and improve the atmosphere in the office. As a result, their productivity and efficiency increase. Employees are more motivated, work faster and better. Providing employees with food products is currently a common practice in the labour market, encouraging them to start and continue working for a given employer… The applicant is entitled to include the expenses for the purchase of the food products indicated in the application (various snacks and non-alcoholic beverages, e.g. coffee, tea, juices, nuts, pretzels, biscuits, milk, water, sugar), which are provided at the company’s premises to employees during the performance of tasks. These expenses do not constitute representation costs.”

Food purchases and catering business

The situation is different if you run a business related to catering, gastronomy, or trading in food products. In such cases, purchasing food products is directly connected with the conducted activity and can be included as tax-deductible costs without major problems. However, it is important to precisely document which products were purchased and how they were used.
 

Summary

Purchasing food products can be included as tax-deductible costs, but only in specific situations and with appropriate justification. It is worth remembering to maintain proper documentation and be prepared for possible questions from tax authorities. As always, the devil is in the details, and each situation requires individual analysis.