Team building

What it means

Team building is a company event aimed at strengthening relationships and cooperation within a team. It may be a trip, a sports activity, a shared dinner, a workshop or a stay of several days during which employees get to know each other outside the usual work setting.

For the company it is an investment in atmosphere, motivation and communication that can show up as lower turnover and better collaboration. Team building is often also part of employee benefits and of building company culture.

The tax and contribution treatment depends on the event's content. If entertainment and hospitality prevail, the costs are often treated as entertainment costs or as benefit in kind for employees. If the event has a clear training or work content, the treatment can be more favourable.

How it works in practice

For team building to be tax-deductible, it is best structured as training or a work meeting with an agenda, a trainer, an attendance sheet and outputs. The documentation helps show in an audit that it was work-related training rather than just entertainment.

The employer can fund part of the costs from the social fund if the rules on its use in the collective agreement or an internal policy allow it. Whenever something is provided to employees, it must be assessed whether it is taxable income or whether a statutory exemption applies.

A multi-day event away from the place of work may count as a business trip, with all the consequences for travel allowances, if it includes a work programme. The employer should clearly define which part is work and which part is voluntary leisure.

What to watch out for

A company generally cannot deduct VAT on hospitality and entertainment costs. For mixed events, such as a workshop with an evening programme, it is therefore wise to get separate invoices from the supplier for the training and the catering parts.

Participation in team building outside working hours should be voluntary. If the employer makes attendance mandatory, it counts as work with a right to pay and possibly supplements, and the employer is responsible for employees' safety during the event.