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In a Danish case (Danfoss A/S and another v Skatteministeriet (Case C-371/07) two companies provided canteen meals free of charge to their own staff and to invited guests.
The Danish Ministry of Taxation said the provision of such meals was subject to VAT.
The companies appealed and the matter proceeded to the European Court of Justice.
The European Court of Justice said that VAT should not be charged where meals were provided free of charge in company canteens to business contacts during the course of meetings i.e. where they were provided strictly for business purposes.
Furthermore if free meals were provided to staff in order to ensure that meetings ran smoothly these were also not subject to VAT.
Where VAT has been paid on these costs claims for the last three years can now be made as long as meals were provided...
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