VAT on entertainment in Italy deductible

Representation and entertainment Italy has its own restrictions

For VAT on representation, entertainment and luxury expenses, refund is not automatic: each refund country may apply its own national restrictions, exactly as it does for domestic entrepreneurs who deduct VAT on these expenses in Italy itself. This means that the question of whether a business meal with a client, a business outing or a representative gift qualifies does not have a single EU-wide answer — it depends on what Italy designates as deductible for its own taxpayers.

In practice, these are often the categories where countries are strictest: some cost categories are excluded entirely, others are only partially allowed, and still others are treated according to the ordinary rules. A business lunch with a prospect falls under a different regime than, for example, fuel or a hotel overnight stay, and within the category "representation" Italy may make further distinctions between, for example, relationship gifts and entertainment costs. For those who wish to request a refund for this type of expense, it is therefore not enough to know that there is Italian VAT on it — the question is each time whether Italy allows that specific cost category, and if so, to what extent.

Where this follows from the directive and the requirements list

Article 17(2) of Directive 2008/9/EC provides that the refund country may apply the deduction limitations that it also imposes on its own taxpayers, which is the legal basis for these per-country differences. Which restrictions Italy specifically applies to representation, entertainment and luxury are set out in the Requirements list of