BASQUE COUNTRY: Can I deduct expenses for customer entertainment?

In general, gratuities are not fiscally deductible expenses.

Are expenses for customer entertainment and similar items considered gratuities?

No, the following expenses are not considered gratuities:

• Expenses for public relations with customers or suppliers.
• Those made in relation to the company's staff in accordance with customs and practices (for example, the purchase of Christmas hampers for employees). However, these gifts are considered additional in-kind remuneration for the workers, so the company must pay the corresponding income tax prepayment to the Tax Agency for these.
• Those made to promote, directly or indirectly, the sale of goods and provision of services.

So, are they deductible?

Yes, all these expenses are deductible (to the extent that they are related to income), but with these limits and requirements:

• Expenses for public relations related to catering, hospitality, travel, and transportation services: are deductible at 50% with a maximum combined limit of 5% of the taxpayer's turnover.
• Gifts and other presents: are deductible if the unit amount per recipient and tax period does not exceed 300 euros and there is documentary evidence of the recipient's identity. If it exceeds that amount, they are deductible up to that amount.

Our professionals will advise you on the deductibility of these types of expenses.