Can a company deduct VAT on project accommodation?
VAT on project-related accommodation is generally deductible provided that the accommodation is used in connection with the company’s VAT-liable business activities and the invoice meets the relevant requirements.
Voit jättää meille soittopyynnön
Jätä nimesi ja numerosi, niin soitamme takaisin saman päivän aikana.
VAT on project accommodation is generally deductible, when a company arranges accommodation for its VAT-liable business activities. The right to deduct requires a valid invoice, and the accommodation must be related to, for example, an employee’s temporary business trip, installation work or a client project.
When is VAT on project accommodation deductible?
A company may deduct the VAT included in a purchase to the extent that the accommodation is used for business activities that qualify for deduction. A clear example is an employee who stays in another town for the duration of a three-month installation project. See also options for project accommodation, when planning a longer work assignment.
There is generally no right to deduct VAT if the property is used for the employee’s private purposes or as their permanent residence. If a company carries out both VAT-liable and non-deductible activities, it may only deduct the proportion attributable to the VAT-liable activities. An accountant can assist with this allocation.
A business may only deduct the tax shown on the invoice, and only to the extent that the accommodation is used for activities eligible for deduction.
Do you need a clear accommodation invoice for the project?
Northern Apartments Oy arranges furnished accommodation and corporate invoicing for the agreed project. Please specify the accommodation period, the number of people and the necessary invoice details.
Enquire about accommodationNäin voimme auttaa
VAT on project accommodation requires a proper invoice
Ask for an invoice in the company’s name and check that it shows the supplier’s details, the invoice date, the period of accommodation, the pre-tax price, the tax rate and the amount of VAT. A booking confirmation or payment receipt alone may not be sufficient grounds for a tax deduction. The company’s policies on accommodation bookings, contracts and invoicing It is advisable to agree on this before making your first booking.
Please ensure that accommodation, parking, meals and other additional services are itemised, as they may be subject to different tax rates or different deduction entitlements. Also include the project number or cost centre on the invoice so that the accountant can link the expense to the correct assignment.
A long period of accommodation may affect your entitlement to a tax deduction
A long duration alone does not determine the tax treatment. The nature of the service, the terms of the contract and the actual nature of the accommodation determine whether it constitutes a VAT-liable accommodation service or a tax-exempt let of a residential property. In the case of a tax-exempt let, there is no deductible VAT on the invoice. Tax Administration guidance on VAT on accommodation services examines the demarcation in more detail.
For example, a six-month furnished tenancy may be classified as an accommodation service if the nature of the service and the terms of the contract support temporary accommodation. A standard long-term residential tenancy, on the other hand, may be tax-exempt. Agree on invoicing and reporting in advance if the company has long-term accommodation needs.
Sample calculation of VAT on accommodation
If the pre-tax price of the accommodation is 1,000 euros and the tax rate stated on the invoice is 14 %, the amount payable is 1,140 euros. Accommodation purchased for VAT-taxable business activities may entitle the company to a deduction of €140. In this case, the company’s final cost will be €1,000.
If only 80 % of the accommodation relates to activities eligible for a deduction, the amount to be deducted is 112 euros. It is advisable for the company to document the basis for allocation, as the deduction must correspond to the actual use of the accommodation. Check any unclear or unusually long arrangements with your accountant or the Tax Administration before claiming the deduction.
Usein kysyttyä
Can a company deduct the VAT on an employee’s project accommodation?
A company is generally entitled to deduct the VAT included in an invoice when an employee stays in temporary accommodation for the purposes of a work project and the purchase relates to the company’s VAT-liable business activities. The company must pay for the accommodation and obtain an invoice that meets the requirements. Any portion attributable to private use or activities not eligible for deduction is excluded from the deduction.
What information must be included on the invoice for project accommodation?
The invoice must include, amongst other things, the supplier’s details, the invoice date, the nature of the service, the period of accommodation, the pre-tax price, the applicable tax rate and the amount of VAT. It is advisable to request that the invoice be made out in the company’s name. The project number, cost centre and the guest’s name make it easier to check the expenses, even though not all of these are mandatory items on an invoice under the Value Added Tax Act.
Can VAT on long-term corporate accommodation be deducted?
A deduction may be possible if the accommodation service is subject to VAT and its use relates to business activities entitling the taxpayer to a deduction. However, a long-term contract may resemble the tax-exempt letting of a residential property. The decision depends on the nature of the service and the terms of the contract, not merely on the length of the accommodation period. If you are unsure about the arrangement, check with your accountant or the Tax Administration.
Can a company deduct tax on additional accommodation services?
The right to deduct expenses for parking, meals, cleaning and other additional services is assessed on a service-by-service basis. Different tax rates may apply to different services, and some of the expenses may relate to the employee’s private use. Ask for additional services to be itemised on the invoice and keep a record of how they relate to the work project. This will enable the accountant to process each expense correctly.
What should you do if there is no VAT on your accommodation bill?
A business cannot claim a VAT deduction if the invoice does not include VAT. This may be because, for example, the arrangement involves the tax-exempt letting of a residential property. Do not calculate the tax yourself from the total amount on the invoice. Ask the service provider for an explanation of the grounds for the tax exemption and check the entry with your accountant before recording it in the accounts.
Request a solution for staff accommodation
Please get in touch if you need short- or long-term project accommodation. You will receive a quote and invoicing details for your company’s records.
Contact us