Your Taxes: Is team building tax deductible?

Can a company deduct the expense of a trip for employees to a fancy hotel or restaurant on the Kinneret to learn about raft building, egg dropping or blind drawing?

May 18, 2018 01:36
2 minute read.
Calculating taxes

Calculating taxes. (photo credit: INGIMAGE)


Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analysis from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief


The Start-Up Nation got where it is thanks to hard work and team building. Team building typically involves educational exercises intended to align team members around goals, build effective working relationships, clarify roles and find solutions to problems – and having some fun together.

So can a company deduct the expense of a trip for employees to a fancy hotel or restaurant on the Kinneret to learn about raft building, egg dropping or blind drawing? Or are the employees taxable on a fringe benefit at rates ranging up to 50%? The Israel Tax Authority (ITA) has just published interesting guidance on team-building expenses, apparently after receiving many inquiries on the subject.

As a general rule, in cases where the good of the employer exceeds the good of the employee, employees are not taxable on team-building activities. All the conditions enumerated in the guidance must be met as summarized below: The work requirements should justify a team-building event, e.g., many employees, teamwork needed, etc.; The employer decides to hold the event and invites the relevant employees; Team-building days are considered workdays, and employees receive full pay; Employees cannot bring their spouses or relatives to any part of the team-building event; Teamwork activities are held during the workweek. If any part of the activity is held over the weekend or during vacations, the full value is taxable as a fringe benefit; The timetable is set or approved by the employer; The activity takes place in Israel; The goal of the activity is to improve work and the interaction between employees. Moreover, the activity must include a professional lecture or enrichment; The employer must keep documentation validating the above; Costs incurred by the employer must be reasonable, having regard to the activity and its goals, according to the Finance and Economy Rules of the State of Israel, pursuant to the State Assets Law, 1951. Currently, that means NIS 400 for a full day without accommodation, or NIS 700 for a full day with accommodation.

Comments: Generally, these rules seem reasonable for a team-building event, but the monetary limits may be on the low side. It is not clear whether these rules are meant to cover staff seminars.

A bone of contention not covered is that of food at workplaces for employees, which can be extensive, especially in hi-tech. But the takeaway from the ITA is this: Check whether the benefit to the employer exceeds the benefit to the employee.

As always, consult experienced tax advisers in each country at an early stage in specific cases.

The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.

Now is the time to join the news event of the year - The Jerusalem Post Annual Conference!
For more information and to sign up,
click here>>

Related Content

BAHRAIN IS preparing to host an event devoted to the US peace plan.
June 16, 2019
Donald Trump and Economic Wars


Cookie Settings