Is a Christmas gift tax deductible?

A set with wine and cheeses, a certificate in a SPA or a robot vacuum cleaner - most employers give their employees a Christmas or New Year's package. Of course, both parties face the question of paying taxes. Is it possible to avoid this or somehow reduce them?

For the tax, the Christmas package is another salary. And this means that you have to pay tax on it. In this case, the size of the gift does not matter. It doesn't matter if you donated a vacuum cleaner or a bottle of wine - the tax must be paid anyway. But Nalog.nl experts know how to legally avoid paying taxes in the case of New Year's gifts, and will advise you.

So how do you avoid paying tax on a present to an employee?

Care must be taken to ensure that gifts to employees fit within the werkkostenregeling. According to it, in the current year you can spend 3% of the salary fund up to 400 euros and 000% of the excess fund amount to spend on tax-free items. For example, the same presents to employees. This is the so-called free space (vrije ruimte). If you spend more then that amount will be taxed.

Hurry to take advantage of this free space before the end of 2021. This year it is more due to the pandemic. Next year there will be no concessions - instead of three non-taxable percent of the payroll up to 400 euros, only 000% will remain. The second figure - 1,7% (of the amount of excess of the salary fund) - will remain unchanged.

If you have not used all 3% of the salary fund, then the balance will not carry over to the next year. Therefore, it is better to do it in 2021, for example, buy a purchase voucher in a bookstore with an activation period of several months and give it this year as an additional bonus.

A gift can be no more than 30% of what is accepted in your industry. For example, even if you want and have the opportunity, you cannot donate a new car to an employee. These gifts are not usually made for Christmas.

Fortunately, the tax authorities will not find fault with your Christmas present up to 2400 euros. This is the threshold for an employee for a calendar year.

What about VAT?

You will be able to get VAT refund for the Christmas package, but only if your employee (to whom the gift is intended) has received compensation for any expenses in the current year in the amount of no more than 227 euros (excluding VAT).

Our recommendation: carefully keep a personalized record of all compensations (including holiday gifts) throughout the year, since if the specified threshold is exceeded, it will not be possible to refund VAT on expenses incurred.

We understand that the issues of taxation of gifts are not simple, so if you want to find out more - call, write, fill out the form below, and we will definitely advise and help you!