• 29/07/2026

Voluntary business expenses are tax-deductible provided they serve the business operations and contribute to generating revenue.

In the case under consideration, the tax authority disallowed the deduction of expenses related to group life insurance premiums for personnel, the purchase of watches provided to employees upon completing 25 years of service, as well as the company’s contribution to the costs of remodeling its customers' shop windows.

According to the tax authority, these expenses were incurred out of liberality (gratuitously) and lacked a productive character; as a result, they were added back as accounting differences to the company’s taxable profits.

The Council of State ruled that the expenses in question aimed, on the one hand, at enhancing employee zeal and performance and, on the other hand, at promoting products, expanding business operations, and increasing company income. Therefore, they constituted productive expenses serving the operational needs and business purpose of the company, and are deductible from its gross revenues regardless of the fact that they were paid voluntarily (Council of State Decision 1151/2012).