What is team-building?

For team-building costs to be tax-deductible, the event must involve activities for employees that strengthen their relationships and improve their qualifications, performance and motivation. It must not simply be an employer-funded trip for employees to have fun together. The added value of the trip must be demonstrable in line with this definition.

Tax-deductible costs

As for the individual costs that may arise during team-building:

  • costs of transport and accommodation – are tax-deductible if the conditions for tax-deductible team-building are met
  • costs of the shared activities – are tax-deductible
  • costs of food and drink – are not tax-deductible

If team-building takes place away from the workplace, employees should also have a travel order, just as when they go on a business trip. The travel order may also entitle them to a meal allowance, which is also a tax-deductible expense for you. 🙂 For employees, participation in team-building is almost always tax-exempt income.

Documenting team-building

Being able to justify the event is crucial for deductibility. It is advisable to have, for example, an event plan (what the event was intended to achieve), an assessment of how it went (how people participated in activities and who took part), a final evaluation (whether the plan was achieved and an overall assessment), photo or video documentation and so on. The photos or videos must clearly show that the event met the conditions for tax-deductible team-building. Ideally, I would recommend that the photos show no signs of excessive partying or alcohol consumption. Having fun does not mean the costs would be disallowed in an inspection, but why encourage conclusions to the contrary? 🙂

If the entire team-building event is invoiced by, for example, a hotel in one go, it is best to ask for the individual items to be listed on the invoice and document everything so that you have sufficient evidence. I would also like to mention that there are companies that organise turnkey team-building events. The advantage is that they help you document the whole event and issue all the necessary documents so that the tax deductibility of these costs can be clearly demonstrated. If you have any questions, feel free to get in touch.