Can I Claim Meals and Client Entertainment as a Business Expense in Brazil?
Rarely. Meals and entertainment are hard to justify as necessary for the business. Ask your contador before treating them as deductible.
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What Receita Federal do Brasil says
How a cost affects income tax depends on the regime. Under Lucro Real an operating expense is deductible when it is necessary for the activity and the upkeep of the business, and usual or normal for its kind of business (RIR/2018 art. 311). Under Lucro Presumido and the Simples Nacional tax is worked out from revenue, so expenses do not reduce IRPJ or CSLL, though they still belong in the accounts. Under Lucro Real a cost must be necessary, usual and normal for the activity, and costs taken on as a favour (liberalidade) are not deductible. Many meals and gifts fail that test. Meals provided to employees follow their own rules.
When you can claim
- Meals during a documented business trip
- Meals provided to staff under the company's policy, as your contador advises
- Water, coffee and snacks for the office, as your contador advises
When you cannot claim
- Partners' private meals
- Gifts and entertainment with no clear business purpose
- Family celebrations paid by the company
- Meals on days with no business activity
Good to know
Pro tip: Record who attended and the business purpose for any client meal. Pay client meals with a company card and add a short note in the expense claim, so your contador can decide on the treatment with the facts in front of them.
Important: Do not assume a meal is deductible. Finn records it and flags it for your contador. Under the Simples Nacional and Lucro Presumido the deductibility question does not change the tax, but the cost still has to be real and documented in the company's books.
Related expenses
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