Supreme Court accepts the deduction of VAT on business hospitality expenses | Landmark win by our Tax Litigation team

Our Tax Litigation team has successfully defended before the Supreme Court, on behalf of a major pharmaceutical company, the right to deduct and recover the VAT on hospitality expenses incurred in the context of the company’s business activity. Our team was led by Alex Karopoulos, head of our Tax Litigation Practice.

From a legal perspective, since the introduction of VAT in Greece in 1987, consistently the Greek VAT Code denied the deduction of VAT on hospitality expenses, even in cases where these expenses were related to the business activity of the taxable persons. This prohibition had as a result, among others, that the cost of business events, like conferences, was increased by the amount of non-deductible VAT.

In a landmark ruling, the Supreme Court accepted our argumentation that such absolute prohibition violates the EU VAT Directive and the Court ruled that VAT on hospitality expenses is deductible, as long as these expenses are objectively related to the business and therefore taxable activities of the entities.

This decision paves the way for ending a decades-long practice of the tax authorities to deny the deduction of VAT on all hospitality expenses and could reduce business costs related to corporate events.