It often happens that a company incurs expenses for the hospitality of customers, suppliers, self-employed workers and other categories of guests. The rules that apply to the deduction of these costs depend on the category of subject and the purpose of hospitality. Expenses have the characteristic of gratuity and, nevertheless, respect the inherence if sustained with reasonableness or according to the industry practice. They are qualified by the tax law as representation expenses , if they are addressed to subjects other than customers, for promotional purposes or public relations. These charges, if addressed to customers during promotional events of presentation of the products or on the occasion of visits to their offices, are entirely deductible. In the different cases, the other categories of the TUIR must be applied . Particular importance assumes hospitality to suppliers, professionals, agents and representatives, as well as unpaid guests.
According to the best doctrine ( AIDC 177/2010) the hospitality costs incurred to accommodate suppliers and their staff must be admitted as a deduction, when the aim is to improve the economic efficiency of the business. Think of the employees of the auditing firm, hosted for free at the company canteen, also to avoid going to the external restaurant (whose costs are reversed to the client) with a waste of money and time. In this context, it is quite clear that the greatest perplexities concern the treatment of hospitality costs of self-employed workers, not only for the question of withholding tax , but also for the deduction ceiling to which the category is subject.
The question has finally been resolved for self-employed workers. The expenses incurred by the client related to the execution of an assignment do not constitute compensation in kind, based on art. 54 c. 5 of the TUIR , so they are not subject to withholding tax, nor to limits of deductibility.
Expenditures related to unrelated subjects from self-employment are still to be analyzed. A classic example based on practice concerns speakers, particularly qualified subjects linked to similar research institutes ( Resolution 11.07.2013, No. 49 / E ). Other examples may include the accompanying works of art sent by the lending museums, the invited candidates for company interviews, etc.
Even in these cases, the deductibility of the cost in the context of business income seems obvious. However, a question arises concerning the possible application of the withholding tax on an occasional self-employment income ( articles 67 and 71 TUIR ) in kind. In determining these incomes it is not, in fact, reproduced the exclusion for expenses related to the execution of the job we find in professional income.
Resolution no. 49 / E / 2013, with which the Inland Revenue has allowed to avoid the withholding in the case of reimbursement of expenses (or direct support of expenses) and absence of compensation, on the assumption that, in the absence of income, the expenses would be deductible and the withholding tax would therefore be repayable.