Representation expenses are costs that entrepreneurs and companies track in their operations, related to services or products aimed at promoting and maintaining business relationships. These expenses can include various activities such as business lunches, gifts for business partners, or even promotional materials distributed to strengthen business ties.

One of the most common examples of representation expenses is a business lunch with business partners. This type of expense is considered representation because the purpose of such events is to improve business relationships, enhance collaboration, or achieve some other business interest. Additionally, gifts in the form of promotional materials, products, or small items for business partners also fall into this category of expenses.

It is important to note that, although these expenses are business-related and may be necessary for ongoing operations, VAT shown on invoices for representation cannot be used as deductible tax. This means that, although representation expenses can be recognized as business costs, the VAT paid on these services or products cannot be deducted when calculating VAT.

Regarding tax regulations, representation expenses are recognized up to a certain amount, which depends on the total income of the company. According to applicable regulations, entrepreneurs and companies can recognize representation expenses up to 0.5% of the total income when calculating profit tax (for companies) or net income (for entrepreneurs who keep records).

Tax International offers the following services:

Accounting services
Tax consulting
Company and business registration
Payroll calculation
Freelance tax calculation
Issuing invoices and similar administrative tasks

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