Christmas Gifts for FY 2024

With the holiday season approaching, it is important to understand the tax and accounting implications of giving gifts to customers, suppliers, and employees. For VAT purposes, if the cost of the gift does not exceed 50 euros, the VAT paid on the purchase is deductible. Additionally, the subsequent supply of the gift is exempt from VAT. Income tax-wise, gift expenses are fully deductible as long as the value of each gift is not more than 50 euros. If the value exceeds 50 euros, the purchase qualifies as entertainment expenses, which are deductible up to 1.5 percent of income. When employers give gifts to employees, the cost is deductible as a business expense. However, it's important to note that employees who receive gifts may be subject to payroll taxes unless the value of the gifts exceeds the specified fringe benefit limit, which is currently set at 1,000 euros for most employees or 2,000 euros for employees with dependent children.