Corporate gifting is a common practice in the European Union (EU) as a way for businesses to show appreciation to their employees, clients, and partners. However, the tax treatment of corporate gifts varies among EU countries, with some having specific rules in place and others following general tax principles.
In general, gifts with a value below a certain threshold may be tax-free, while gifts with a value above the threshold may be subject to taxation as a benefit. Businesses must be aware of the tax treatment of corporate gifts in the EU to comply with local laws and avoid potential tax liabilities.
How Did We Get Here?
Corporate gifting tax laws in the European Union (EU) have evolved over time in response to changes in the business landscape and in efforts to ensure that the tax system is fair and efficient.
The EU is a group of 27 European countries that have joined together to create a single market, allowing goods, services, and people to move freely between member states. As part of this process, the EU has established common rules and standards for many aspects of economic activity, including taxation.
One aspect of EU tax law that has received significant attention in recent years is corporate gifting. In the past, corporate gifting was often seen as a way for companies to reward employees or build relationships with customers, but it also had the potential to be used as a way to avoid or reduce taxes.
In response to these concerns, the EU has implemented several rules and regulations to ensure that corporate gifting is properly taxed.
What Does Corporate Gifting Tax Mean for Companies?
In European Union (EU) countries, corporate gifting is generally subject to value-added tax (VAT), a tax on the sale and supply of goods and services. The VAT rate for corporate gifts may vary depending on the country and the type of gift.
For example, in some EU countries, the VAT rate for corporate gifts may be the standard VAT rate for the country, while in other countries, the VAT rate for corporate gifts may be reduced or even zero-rated.
Companies need to understand the VAT rules for corporate gifting in the EU country where they are based and in EU countries where they may be making gifts to customers or clients. This will help them ensure that they are complying with the relevant tax laws and avoid any potential penalties.
In addition to VAT, companies may also consider other tax implications of corporate gifting, such as gift and estate taxes, which may apply depending on the value of the gifts and the country in which they are given.
Corporate Gifting Tax Laws, by Country
Corporate gifting tax laws vary by country in the EU. In general, corporate gifts are considered a business expense and are tax-deductible in most EU countries. However, there may be limits on the value of the gift and the type of recipient.
Here is a brief overview of the tax treatment of corporate gifts in some EU countries:
The United Kingdom
In the United Kingdom, corporate gifts' tax treatment depends on the gift's value and the relationship between the giver and the recipient.
According to the HM Revenue & Customs (HMRC), gifts with a value of less than £50 are generally tax-free, regardless of the relationship between the giver and the recipient. This means that the recipient does not need to pay tax on the gift, and the giver does not need to report the gift as a taxable benefit.
If the value of the gift exceeds £50, the excess is considered a taxable benefit for the recipient. The recipient will need to pay income tax on the excess value of the gift at their marginal rate. The giver must also report the gift as a taxable benefit on the recipient's tax return.
There are some exceptions to these rules. For example, gifts between spouses and civil partners are tax-free regardless of their value. In addition, certain gifts, such as birthday or Christmas presents, may be tax-free if they are "trivial" and the recipient is an employee or director of the giver. Organizations with five directors or less pay Trivial Benefits of up to £300 per year.
Full text: When business gifts are tax deductible
You can read more on corporate gifts and taxation in the United Kingdom here.
Effective date: April 6, 2016
Austria
In Austria, promotional gifts worth more than €10 must be taxed by the recipient as operating income or wages unless the company giving the gift pays a flat-rate tax of 30% on the gift's value (up to €10,000 per recipient per year). Gifts worth less than €10 are tax-exempt.
For the company giving the gift, gifts worth up to €35 per person per year can be considered a business expense as long as they are given without consideration and for business reasons, but any amount above €35 is not deductible. However, if the recipient must use the gift only for business purposes, the deduction is allowed even if the gift's value exceeds €35.
There are no restrictions on deducting gifts to employees as a business expense. Gifts to employees are also exempt from income tax and social security contributions as long as the general "non-cash exemption limit" of €44 per month (from 2022 onwards: €50) is not exceeded.
You can read more on tax aspects that must be taken into consideration for corporate gifts in Austria here.
Effective date: 2022 onwards
Belgium
The tax treatment of corporate gifts depends on the value of the gift and the relationship between the giver and the recipient. The gift tax applied to movable varies depending on the location and the recipient of the gift. The tax rate ranges from 3% to 7%.
Gifts with a value of less than €50 are generally tax-free, regardless of the relationship between the giver and the recipient. If the value of the gift exceeds €50, the excess is considered a taxable benefit for the recipient. The recipient will need to pay income tax on the excess value of the gift at their marginal rate. The giver will also need to report the gift as a taxable benefit on the recipient's tax return.
More information on corporate gifts in Belgium can be found here.
Information about how Belgian residents are required to pay gift tax can also be found here.
Effective date: May 29, 2017
Bulgaria
In Bulgaria, gifts made by companies are subject to tax, which varies depending on the recipient's relationship with the giver and the municipality where the gift is given.
The tax rate ranges from 0.4% to 6.6% of the gift's value, with higher rates applying to gifts given to recipients who are not direct relatives or siblings.
You can read more on corporate gift taxing in Bulgaria here.
Effective date: TBA
Czech Republic
In the Czech Republic, promotional gifts given as part of a business activity can be claimed as tax-deductible expenses if they meet certain criteria. These criteria include a value of no more than CZK 500 (excluding VAT), being marked with the trade name or trademark of the provider, and not being subject to excise tax.
If the tax administrator doubts the gift's eligibility, the taxpayer must provide proof that it meets the requirements for tax deductibility. There are no restrictions on the recipients of these gifts.
You can read more on corporate gifting tax in the Czech Republic here.
Effective date: TBA
Denmark
In Denmark, employees can receive up to DKK 1,200 worth of gifts and benefits tax-free, including Christmas presents worth up to DKK 900. Occasional gifts, such as birthday or wedding gifts, are also not taxed as long as they are appropriate in value. These occasional gifts are not included in the DKK 1,200 limit.
Read more information on tax and Christmas gifts in Denmark here.
Effective year: 2021 onwards
Finland
When employees are given gifts, the recipient may be required to pay gift tax in Finland. However, gifts with a value of less than €5,000 are not subject to this tax. Any gifts received from the same donor within 3 years will be combined when considering the €5,000 threshold.
The recipient must file a gift tax return within 3 months of receiving the gift, and failure to do so may result in a late-filing penalty or a tax increase.
Full text: Corporate gifting tax policies in Finland.
Explore more with tax calculator for Finland here.
Effective date: 2017 onwards
France
In France, corporate gifts can be deductible expenses for a company if they serve the company's interests and are not excessively valued. Reimbursements for executives who give gifts to customers or suppliers are deductible if they serve the company's interests and are reasonably priced.
These reimbursements are tax-exempt for the executive. If the gifts are not deductible for the company, the reimbursements paid to the manager are considered a supplement of taxable remuneration. The total amount of gifts must be reported on the "RELEVE DE FRAIS GENERAUX" form if it exceeds €3000 per year.
VAT on the purchase or cost price of a good may not be recovered if the good is sold without remuneration or for a significantly lower price. However, exceptions apply for objects of low value, promotional materials, and samples. Gift vouchers given to employees may be subject to social contributions unless they meet certain conditions or do not exceed €169 per employee per year.
Read more about corporate gifting tax in France here.
Effective date: TBA
Germany
In Germany, corporate gifts of up to €35 per person per year to customers and business partners can be tax-deductible if given for operational reasons and with appropriate documentation. If the €35 limit is exceeded, the entire amount is not tax-deductible.
Unlimited tax deductibility applies to gifts to employees as long as they do not exceed the general non-cash exemption limit of €44 per month (from 2022 onwards: €50). Additional gifts of up to €60 are tax-free for personal occasions such as birthdays or weddings.
You can read the text of gift taxation in German here.
Effective date: 2022 onwards
Greece
In Greece, gifts given by companies to employees and other individuals are generally subject to tax. The tax rate on gifts depends on the value of the gift and the relationship between the giver and the recipient.
Gifts given to employees are considered taxable income and are subject to social security contributions and income tax. The tax rate on gifts to employees depends on the value of the gift and the employee's tax bracket.
Gifts with a value of up to €800,000 are not subject to gift tax in Greece. If the value of the gift exceeds €800,000, a tax of 10% must be paid. Previously, gifts valued at €150,000 or more were subject to gift tax in Greece.
You can read the text of corporate gifting tax in Greece here.
Effective date: October 1, 2021
Hungary
In Hungary, promotional gifts given by a company to customers and business partners for marketing purposes are generally not subject to VAT if they meet certain conditions, such as samples of goods or low-value items. If these conditions are not met, the promotional gifts are considered delivery of objects for a fee and are subject to VAT.
The gift duty rate is based on the net value of the gift, which is the market value minus any liabilities associated with the gift. The general rate for residential property is 9%, while the rate for other assets (except vehicles) is 18%. Different rules apply to vehicles.
You can read the text of tax aspects of promotional gifts in Hungary here.
Effective date: TBA
Ireland
In general, a gift for VAT purposes is a good that is given by a business for no consideration. This means the recipient does not have to pay anything in exchange for the goods. However, if the recipient does pay consideration, then the good is not considered a gift for VAT purposes and is subject to VAT at the applicable rate. In addition, gifts that cost more than €20 (excluding VAT) to the donor are generally subject to VAT unless they meet certain conditions, such as industrial samples or advertising goods.
The taxable amount for a gift subject to VAT is the cost of the gift to the donor, excluding VAT. The rate of VAT that applies depends on the type of goods involved. It is crucial for businesses to correctly determine whether a good is a gift or not, as this can affect their VAT liability.
Full text: VAT on gifts in Ireland
Effective date: TBA
Italy
In Italy, the tax treatment of corporate gifts depends on the recipient and the nature of the gift. For clients, the costs may be fully deductible if the unitary value is less than 50 EUR or within certain limits if the value exceeds 50 EUR.
For employees, the costs are generally deductible as employment costs but may not be deductible for regional tax (IRAP) purposes for unlimited liability companies and individual entrepreneurs.
Gifts of goods produced by the enterprise may be treated as free samples and not subject to VAT with specific documentation, while gifts of goods not produced by the enterprise and gifts to employees are generally subject to VAT.
Full text: Corporate gifting tax in Italy
Read more on the tax regimen for corporate gifts in Italy here.
Effective date: December 31, 2007
Luxembourg
In Luxembourg, gifts received from residents are subject to gift tax, while gifts from non-residents are only subject to gift tax if they are real estate located in Luxembourg. Gift taxes are not subject to individual income tax for the recipient but are subject to inheritance and gift tax provisions. Gifts tax in Luxembourg ranges between 1.8% and 14.4%. Gifts of immovable property are subject to an extra transcription fee of 1%.
Read more on gift tax rates in Luxembourg.
Effective date: TBA
Netherlands
In the Netherlands, corporate gifts are generally subject to value-added tax (VAT). A business cannot recover VAT on certain promotional gifts and employee benefits if the total cost per recipient exceeds €227 per year. This applies to both the purchase and production costs of the gifts or benefits, excluding VAT. The input VAT is recoverable if the cost is below €227 per recipient per year.
Full text: Netherlands: No VAT recovery, certain promotional gifts or staff benefits
Learn how to file a gift tax return here.
Effective date: December 22, 2021
Poland
The expenses associated with corporate gifts in Poland can be recognized as business expenses because they contribute to the sale's positive effect and income generation. These expenses are considered operating expenses and should be recorded.
However, the receipt of promotional gifts by consumers may be subject to tax unless the value of the gift is less than PLN 200. The percentage of tax payable is between 3% and 20%.
You can read the text of gifting taxation in Poland here.
Effective date: TBA
Portugal
In Portugal, corporate gifting is generally not tax deductible for the company making the gift. However, there are some exceptions. For example, gifts made to employees may be tax deductible as a business expense if they are considered necessary for the performance of the employee's duties and are not excessive in value.
Gifts made to clients and business partners may also be tax deductible if they are considered necessary for the development of the company's business and are not excessive in value. These gifts are taxed under the stamp tax at 10%.
Explore more on Portugal taxation here.
Effective date: TBA
Romania
In Romania, costs for gifts given to customers, partners, etc., are considered protocol expenses and are only tax deductible up to 2% of the company's accounting profit. The tax-deductible protocol expenses are calculated at the end of the year for the relevant financial year.
Any additional protocol expenses are not tax deductible. Protocol expenses include costs associated with meals, gifts, and meetings with potential customers.
Read more about tax aspects that must be taken into account for promotional gifts in Romania.
Effective date: TBA
Slovakia
In Slovakia, the tax treatment of promotional gifts is regulated by Act No. 595/2003 Collection on income tax and Act No. 222/2004 Collection on VAT. Gifts with a purchase price of more than EUR 17.00 per item are considered a tax expense for the business.
There are special rules for wine, high-percentage alcohol, and cigarettes: wine is tax deductible up to EUR 17.00 per bottle and 5% of the tax calculation base, but high-percentage alcohol and cigarettes are not tax deductible. VAT can also be claimed on promotional gifts given to business partners or employees, as long as the unit price does not exceed EUR 17.00 excl. VAT.
You can read the text of the Slovakia corporate gifting tax here.
Effective date: 2004 onwards
Spain
According to Article 15. e of the Law on Corporate Tax 27/2014 in Romania, expenses for donations and gifts are generally not tax deductible. However, there are some exceptions to this rule. Expenses for services to customers and suppliers, such as invitations to sporting events, are tax deductible up to 1% of company turnover.
Expenses incurred by company personnel in accordance with usual practice are also deductible. Expenses that promote the sale of goods and services and expenses related to revenue may also be deductible.
Read more on corporate gifting taxation in Spain here.
Effective date: 2014 onwards
Sweden
The Sweden government introduced a temporary corporate tax exemption for gifts to workers. For the tax year 2021, the value of the tax-free Corona-related present to employees was raised to SEK 2,000 (including VAT), which is the maximum amount that a Swedish business can offer to a worker without incurring any financial obligations.
To qualify as a tax-free gift, the total value of the gift, including VAT, cannot exceed SEK 500. Of course, a company is free to give more expensive gifts, but in that case, the gift is treated as compensation and is subject to employee taxation as of the first krona. Gifts cannot be made in cash.
Christmas gifts for customers are not tax deductible, but simpler, low-value advertising gifts are eligible for deductions. The presents must be simple gifts or have a clear relation to the company's business. Typically, these are branded promotional items that bear the company's emblem.
Full text: Tax free gifts to employees in Sweden
You can also read more on corporate gifts for Christmas dinners.
Effective date: 2021 onwards
Our Final Thoughts
The tax treatment of corporate gifts in the European Union can vary depending on the specific country and the nature of the gift. In general, small gifts with a low value may be exempt from value-added tax (VAT) or may be subject to reduced VAT rates in some EU countries. However, larger gifts or gifts with a higher value may be subject to full VAT rates.
It is crucial for businesses to be aware of the specific tax rules and regulations in the EU country where the gift will be given and to consult with a tax professional if necessary to ensure compliance.
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