We will not grumble about permanent tax changes, when they redound. And this subject is, in terms of tax regulation, far more favorable for entrepreneurs. This topic we could also call the Hosting and bestowal of business partners, in the text we will include other forms of bestowal of business partners. 1) Representation Representation consists of the costs of hosting business partners (food and drink, costs of relaxation, sport, recreation and entertainment, rental cars, boats, planes, houses). Representation does not make the cost of accommodation of employees, board members and owners. We've already written, so now we will expand the subject to the payment of salaries in kind (when employees receive), the payment of profits or income from capital (when owners receive). Representation consists of the bestowal of business partners, if due to excessive value can not be classified in another, more favorable category. Herein there is no news regarding taxation. From 01st March,2012 the representation with no right to deduct prepayment  and the expense is tax non deductible in the amount of 70% of the cost of representation. Non-deductible tax cost (in particular 70% of the total cost of purchase) is the amount at which the end of the year is calculated income tax, at a rate of 20%. 2) Promotion Briefly, the promotion costs, in tax terms, are considered bestowal of business partners if they at the same time satisfying the following requirements: 1) if they are given products and goods from the assortment of the taxpayer, 2) if such products or goods adapted for promotion purposes and with marked it is not for sale (written, glued or otherwise affixed to the product); 3) if the products or goods for promotion purposes in smaller packages that are normally not sold, but are used for testing, tasting, etc .; 4) single value (cost of purchase or production) does not exceed 160,00 HRK. Before the limit was 80,00 HRK. Exceptionally, if the products have a sign of company or product is given for use in the sales area of the buyer can be considered a promotion and if their value is greater than 160,00 HRK. Exceptionally, the promotion can also be considered an expense that occurs when the advertising items with the name of the company, product or other form of advertising (glasses, ashtrays, table covers, coasters, pens, notebooks, lighters, key chains, etc.) are given. Promotional gifts should be given in various amounts. In particular, the same person may be bestowed more than once every three months. Otherwise the cost of the purchased gifts are considered representation. The above implies that one should keep a record of giving, ie. a record to whom and when the gift is delivered. When we talk about the expense of promotion, the prepayment is recognized fully. In addition, the cost of promotional materials is fully tax-deductible expense. Seen overall, the cost of promotion is much more favorable for entrepreneurs (especially VAT taxpayer) of representation, especially when it comes in larger amounts. Just to clarify the concept of purchasing. If an entrepreneur who donates to a VAT taxpayer, the cost of purchasing is a price without VAT (as prepayment is not an expense). If he si not a VAT taxpayer, the cost of purchasing is the total price with VAT included. 3) Samples The samples also belong to the category of bestowal of  business partners (present and potential), and are subjected to the previously mentioned criteria. If, for ex. perfumery in the sales area keeps perfume samples in specially marked bottles which are intended for use exclusively in the sales area, then the cost of purchasing the sample is not limited and represents the cost of promotion, with the right to deduct prepayment (during purchasing of suppliers). 4) Prize games Prizes bestowed as part of lawfully organized prize games are not subject to the above limitations, which means that for the organizers mean the cost of promotion with the right to deduct prepayment, regardless of the value of the gift. 5) Other promotion costs The cost of advertising and marketing are not really the topic of this article, and are not subject to the above limitations, but are considered to be normal operating expenses. We are talking about this because of similarities in the same name of the expense. Also, donations and sponsorships are another issue, which we wrote in a separate article.   Tibor Jankač