Fiscal provisions for business protocol expenses

Written by: Bridgewest


Almost every company in Romania, regardless of its size, will invest in protocol expenses for various occasions. These expenses include corporate gifts, business lunches or dinners and other expenses incurred for the purpose of strengthening business relations. Our accountants in Bucharest can tell you all about the fiscal provisions for these expenses. 

Calculation method

In terms of corporate tax, business protocol expenses are deductible within a limit of a 2% quota applied on the difference resulted from the total taxable income and the total expenses related to taxable income, other than those which include protocol expenses and income tax expenses. 
The basis of calculation to which the 2% quota applies is the difference between the total revenues and the expenses, calculated according to the relevant accounting regulations, to which tax adjustments are made. The protocol expenses and other expenses, like those related to the taxable income, are deducted from the total expenses. The taxed profit for protocol expenses also includes the expenses which have a collected VAT rate for the gifts offered by the company, having a value of 100 lei or above. 
Items that have a small value and are offered as gifts are not considered delivery of goods, if the value of each gift is lower or equal to the 100 lei threshold. 

Deductible protocol expenses 

For some protocol services, like restaurant meals with different business partners, the VAT is deductible if the protocol actions are performed for purposes closely related to the economic activity of the company. If the company owner can prove that the business meal was necessary for the future of the business or for securing a business transaction, the VAT is deductible.
The purpose of these types of meetings can be justified with the help of additional documents that prove the relationship with the business partner (reports, signed contracts between parties, etc.). The services are not deductible if a clear connection cannot be made. 
For more information about deductible business expenses, please contact our accountants in Romania. We provide various accounting services in Bucharest for any type of company.