Year-end gifts and fiscal regulations

Year-end gifts and fiscal regulations

The year-end season is coming, which means festive occasions and gifts, even within the business world. However, when giving end-of-year gifts, it is important to consider the tax rules, as they affect the final cost. OSU GIFTS lists the most important regulations.

Year-end gifts for employees

Gifts given to employees are generally considered as wages, meaning they are subject to taxes and social security contributions. However, there are exceptions for Saint Nicholas, Christmas, and year-end gifts, provided they meet certain conditions:

Maximum amount:

The gift must not exceed 40 euros per employee.

  • Gifts for employees' children: The same limit of 40 euros* per child applies for dependent children.

It is also important to consider whether these gifts can be deducted as business expenses. According to Acerta, this is possible, but only if:

  • all employees receive the same benefit,
  • the gift is linked to a specific occasion (such as year-end),
  • the total amount per employee (and per dependent child) does not exceed 40 euros.

Year-end gifts for clients and/or prospects

Giving a gift to clients or prospects can help maintain and strengthen business relationships. In principle, you can give clients whatever you like, but if you want to deduct the costs for tax purposes, there are some restrictions:

  • VAT deductibility: You may give one gift per year, with a value of less than 49.99 euros (excluding VAT) per recipient, to deduct the VAT.
  • Exception: VAT on gifts that consist of strong alcoholic drinks or tobacco is not deductible.
  • For wine, beer, champagne, and sparkling wines, VAT is deductible, provided the value of the gift does not exceed 49.99 euros (excluding VAT).
  • Tax deduction: The costs of a business gift can also be deducted for tax purposes. If the gift costs less than 125 euros, 50% of the costs are deductible.

Promotional (year-end) gifts

Year-end gifts can also be used as a promotional tool to promote the company or certain products. In this case, different tax rules apply:

100% deductible:

Both the costs and VAT are fully deductible, provided certain conditions are met:

  • The gift must have a modest value in relation to the products or services being promoted.
  • It must be widely distributed to the target audience.
  • The gift must display a clearly visible and indelible logo or name of the company or product.

By adhering to these tax rules, businesses can smartly manage their year-end gifts and avoid unnecessary costs.