What you should choose, in order to avoid headaches when you deduct your expenses

Corporate meetings

The European law has substantially reduced deductions and created limitations on incentive travel and corporate meetings. While incentive travel is usually conducted merely for entertainment rather than educational purposes, the days of pure incentive travel are gone, according to the Travel Market Report. There is a tendency to integrate ‘meeting content’ in the incentive travel business, as a result of EU regulations that make expenses more difficult to recover when it comes to ‘incentive travel’. 

Your meetings need a clear business goal

A number of restrictions have been introduced by the European law, due to economic challenges and intense scrutiny of the corporate meetings industry. More than ever, as a meeting and event planner you need to stay updated with regulations, work with the best VAT specialists and budget accordingly. With the new regulations it becomes harder to claim back taxes for incentive trips, while for corporate business meetings it is easier. Once you prove that your meetings have a clear business goal, it might be less complicated to recover your expenses and achieve savings for your business. More organizations are now combining the two – incentive travel and corporate meetings – merely for tax reasons, according to a research done by the Incentive Research Foundation.

Leisure activities increase deduction problems

In most of the European countries, leisure activities are not refundable. Therefore, as a meeting and travel planner you must be able to prepare some serious documentation and paperwork, as you need to prove a clear business goal for your corporate meetings. For conventions, seminars and other meetings abroad, travel is deductible as long as you submit documents that show the followings: the number of days of the trip, the number of hours in each day you devoted to business, as well as a program of your business activities during the meetings. As a general rule, documents that are detailing the trip and show a business purpose are very useful when it comes to reimbursements.

Keep the itineraries

The line between business and pleasure gets blurred in the corporate meetings and events industry. As such, there is an obvious need to show a clear goal of educating, enhancing networking and motivating your participants. Among the documents that you might need in order to stress your event’s business purpose include itineraries and specific corporate meeting materials. Solid documentations and paperwork will always increase your chances in securing the desired deductions.

In UK, France, Germany, Norway deductions run easily

For tax purposes, meetings and travel planners should pay special attention to documents and receipts. When the purpose of the meeting is pleasure, not business – the expenses are not easily deductible, especially for corporations that have to comply with more strict regulations. The country where the meetings and events take place is also important, as rules are different from country to country. In the UK, France, Germany, Norway, deductions run easily, since they are less bureaucratic. However, even these countries have strict regulations on what constitutes a ‘business meeting’ and an ‘incentive event’, in which VAT is not usually refundable. European tax authorities usually refund VAT, if half of the day is spent on actual corporate meetings, with the remaining half engaged in leisure activities. It is also worth mentioning that some companies are not aware of the amounts they can secure from the reimbursements or they just give up due to bureaucracy, long waiting terms and unclear regulations. However, these costs are worth recovering, since they can bring substantial savings to your company. Approximately 5 billion euros are lost, annually, as companies do not take action in recovering their taxes. Although incentive travel is a topic that stirs debates, it is worth reminding the authorities that the meeting industry creates 2.4 million jobs, according to the Incentive Research Foundation.

Popular destinations for incentive travel:

Italy
Greece
Spain
Portugal

Popular destinations for corporate meetings:

Germany
Belgium
UK
Ireland
Switzerland

Sources: 

  1. Travel Market Report – http://www.travelmarketreport.com
  2. Incentive Research Foundation – http://theirf.org
  3. European Tourism Association – http://www.etoa.org
  4. International Forum of Travel and Tourism Advocates – http://www.iftta.org/