Food, representation fees and daily allowances

Food, representation fees and daily allowances

Food is a personal expense for which deductions normally is not accepted, even when travelling with the business. If the company pays for food for an owner or an employee then the person should be taxed for benefits from free food. This is time consuming to administer and in our opinion costs more to manage than the gains from the deductions. There are no taxable benefits if the food is for representative purposes. 

When traveling for business purposes you can withdraw a daily allowance free of taxes. This compensates you for additional personal expenses you might have due to the travel, such as food. It doesn’t compensate for actual expenses but for a standardized sum depending on the country. You need to travel more than one day to get the allowance. 

More about daily allowances at Skatteverket’s website.

Concluding tips:

  1. Although representation is not deductible, it is allowed, and still beneficial to bookkeep in the company.
  2. In sole trader businesses and trading partnerships, it probably costs more to bookkeep and administer representation for smaller amounts than what you save in VAT and tax from bookkeeping it. The expense affects tax in the same way as if you make your own withdrawal, and the amount of VAT is usually very low.
  3. Don’t forget to deduct daily allowances when you travel with an overnight stay with your business.
  4. If the company does not pay for the accommodation, you will receive an increased night allowance, e.g. if you live with relatives or friends.
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