Canteen VAT with new control signal
A company’s cafeteria operation activity is subject to VAT, and therefore outgoing VAT must be calculated on sales, while VAT on purchases can be deducted.
Sales in company cafeterias often occur at prices that are below the purchase price (deficit), and since such transactions are between interested parties, sales VAT should be based on normal market value or cost.
The rules apply to all companies that sell food and beverages to their employees at a loss. The rules also apply to companies who are not ordinarily subject to VAT on their sales to external customers.
Companies that buy food and beverages in ready-to-serve condition from external suppliers, and which do not use their own workforce to prepare the food and beverages, must calculate sales tax on the invoiced price excluding VAT.
If, for instance, a company buys food at a per-plate price of 100 DKK plus VAT (here, the VAT is 25 DKK), but sell food to their employees for 40 DKK per plate, the outgoing sales VAT of 25 DKK must be posted, even though the VAT on the price charged is actually only 8 DKK.
It is permissible for a company to use its own workforce for serving, clearing tables and washing dishes without posting VAT on this work.
Preparation price example:
Assume, for instance, that a company buys raw materials for a per-plate price of 40 DKK plus VAT (VAT is 10 DKK), has its own labour costs of 30 DKK and the costs of running the kitchen are 10 DKK. If the company then sells food to their employees for 30 DKK per plate, the outgoing sales VAT of 20 DKK must be posted, even though the VAT on the price charged is only 6 DKK.
Simplified method example:
If, for instance, a company purchases raw materials for a value of 100 DKK plus VAT (VAT is 25 DKK) and 5% is added, the products now have a value of 105 DKK. The company pays 100 DKK in labour to canteen staff attributed to 75% of the payroll, which corresponds to 75 DKK, then the preparation price of the food is 180 DKK (105 + 75) and the outgoing VAT is 25% of the preparation cost (a total of 45 DKK).
There is a full deduction for meals for guests or staff in their own cafeteria when the consumption takes place in conjunction with meetings, etc. during the company's taxable activities. These activities can be, for example, attendance at meetings with business associates, board meetings, staff meetings with academic content and theme days.
The company will not pay cafeteria VAT on such meals, and may therefore reduce the taxable amount for cafeteria VAT with their value.
Either the company can choose to establish a concrete statement of the feeding of guests/staff, or a fixed reduction of 3% of the VAT base calculated using the simplified scheme to be used for the feeding of guests or staff.
If your company has any problems of the above nature, please contact your consultant at Azets.