CA 2180/21 Director of VAT Netanya v. Amdocs Israel Ltd.
CA 2180/21 Director of VAT Netanya v. Amdocs Israel Ltd. (Nevo 30.01.2023):
The Director of VAT Netanya appealed the judgment of the Central District Court in Lod, in proceedings designated as TA 22467-09-17 Amdocs Israel Ltd. v. Director of VAT Netanya (Nevo 17.12.2020). The Supreme Court dismissed the VAT Director's appeal and accepted Amdocs's position and the judgment of the District Court in Lod regarding the application of Regulation 15A of the Value Added Tax Regulations, 5736-1976, which deals with input tax deductions, with respect to areas used as kitchens and for serving meals to Amdocs employees. Adv. Shlomi Vaknin represented Amdocs, which prevailed in both the District Court and the Supreme Court.
District Court:
TA 22467-09-17 Amdocs Israel Ltd. v. Director of VAT Netanya (Nevo 17.12.2020):
The appellant appealed against a tax assessment in which the VAT Director disallowed the deduction of input tax for all expenses attributed to the dining halls and kitchens that served the appellant's employees (including rent, electricity, water, and similar expenses). The Court accepted the appeal and held in its judgment, through a thorough and extensive analysis, that an input exclusively related to meals provided by the employer to its employees consists of raw materials, kitchen equipment, cooking and baking work, tables, chairs, tableware, dishwashing, cleaning of tables, and cleaning of the dining hall floor, and that all of these are an integral part of the term "meal" for the purposes of Regulation 15A. However, an input paid by the employer in connection with the premises where the meal is served — in our case, the proportionate share of Amdocs's leased building designated to serve as employee dining halls — is not considered part of the term "meal" for the purposes of Regulation 15A of the Regulations, and therefore does not constitute a non-deductible employee benefit.
