Recently, the discussion about the tax treatment of teambuilding activities has returned to the attention of the business community. The Chamber of Tax Consultants has pointed out that these activities should be considered necessary investments in team development and not merely recreational events, which would open the way for the deduction of related VAT.

For companies, especially for financial directors and budget managers, the issue is not an abstract one. Currently, legislation treats teambuilding activities as protocol and entertainment expenses, which makes VAT non-deductible. This rigid classification means additional costs for companies and, moreover, a high level of uncertainty, since the tax treatment can be interpreted differently from one audit to another.

From our perspective at Cabot Transfer Pricing, the arguments for reconsidering VAT treatment are strong. Teambuilding activities are not just a personal benefit for employees but a means by which companies increase productivity and reduce employee turnover. Recruitment and training costs for new employees have increased significantly, and retention has become a strategic objective for any company. In this context, investments in team cohesion cannot be regarded as simple protocol expenses, but as essential elements in organizational development.

Furthermore, in many European countries there are already tax practices that recognize these types of expenses as deductible, precisely because they are directly linked to the economic activity of companies. Romania could align itself with these practices and send a real signal of support to the business environment.

Until a possible legislative change, however, companies must remain cautious. Our experience in assisting with tax audits shows that inspectors pay close attention to how these expenses are documented. Therefore, it is important that the objectives of teambuilding activities are clearly defined and supported with programs, reports, and clear conclusions. In some situations, expenses may be classified closer to the area of training and professional development, if there are sufficient arguments to support this.

The role of financial directors and CFOs is not only to manage these costs correctly but also to build a solid line of reasoning before the authorities. Close collaboration with tax and transfer pricing specialists can make the difference between a vulnerable position and a well-defended one.

In conclusion, the issue of VAT deductibility for teambuilding activities is not just a technical one but also involves aspects related to the economic and fiscal justification of these expenses. For companies, however, the stake remains an immediate one: how to keep teams motivated and high-performing while complying with tax requirements. The solution lies in thorough documentation, caution in classification, and seeking specialized expertise when matters become sensitive.