Thresholds for exempt occasional gifts also increased for tax purposes

Do you sometimes give a present to your employees? This can be done in a tax friendly manner. This expenditure is deductible for the company. In the hands of the employee the gift is an exempt social advantage. As of end last year, the social and tax amounts are again aligned.

Which gifts?

It concerns presents which are given to all employees for a certain occasion: Santa Claus, Christmas, New Year or the feast of a certain sector's patron saint.

Additionally, you can also make a gift to:

An employee receiving an honourable distinction.

An employee which is getting married or entering into a legal cohabiting contract.

An employee who is retiring.

Exempt but deductible

The huge advantage is that these gifts are a tax exempt social advantage for the employee. While these costs are deductible for the employer.

Social and tax thresholds again aligned

For different gifts, different thresholds apply. These thresholds are again the same for tax and social purposes.

For social security purposes, the amounts below apply to gifts as from 1 January 2017.

For tax purposes, the amounts below apply to gifts as from 1 January 2018.

Both authorities have introduced the new thresholds retroactively.

Thresholds

Santa Claus, patron saint, Christmas or New Year: 40 euro per employee, and additionally maximum 40 euro per dependent child (previous 35 euro).

Honourable distinction such as 'labour medal': 120 euro (previous 105 euro).

Marriage and legal cohabitation: 245 euro (previous 200 euro).

Retirement: 40 euro per complete year of service (previously 35 euro). With a minimum of 120 euro (previous 105 euro) and a maximum of 1.000 euro (previous 875 euro).

The nature of the gifts doesn't matter. It can be in kind, a voucher or cash.

Threshold exceeded?

In case the company gives too much, the deduction of the full amount is disallowed - also for the part below the threshold.

For the employee, the situation is different: in case the threshold of 40 euro is exceeded, the complete gift is in principle considered as taxable income. However, there is still an escape route: gifts up to 50 euro are considered as small value gifts. In such case, the employee is not taxed, but the employer cannot deduct the expenditure.

Finally, note that the company can apply for a ruling in case it wants to give a one-off bigger gift to its employees. The ruling commission generally accepts a gift up to 500 euro per employee for a one-off occasion (e.g. 10th anniversary of the company).

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