Business gifts are a great way to show your business associates that you appreciate them. Beautiful gifts are often handed out, such as notebooks, chocolates or a bottle of wine. But how tax deductible are these gifts and what are the best gifts for tax purposes?
There are a number of things that determine to what extent you can recover the VAT paid via your VAT return, and whether you can include the expense as a deductible professional expense for tax purposes to reduce your taxable base.
It is important to know that a distinction is made between promotional items, premiums and business gifts. Read more about the difference between promotional items, premiums and business gifts here
Promotional items are there to increase brand awareness. A promotional item must meet the following conditions:
The VAT on promotional items is 100% recoverable.
Advertising articles are 100% tax deductible.
Premiums are intended to promote the sale of certain products and are, for example, given away as a gift with a purchase. They meet the following conditions:
The VAT on premiums is 100% recoverable.
The costs of purchasing premiums are 100% tax deductible.
Promotional gifts are all gifts for a limited category of customers or other business relations, such as, for example, drinks, flowers, chocolates and luxury items. Products are promotional gifts if:
Tip: give one promotional gift per year per customer for less than €50 excl. VAT with the logo of your company clearly & permanently affixed. Then the gift falls under promotional items and is 100% tax deductible and the VAT is also 100% recoverable!
Applying a sticker to the gift is not sufficient, because a sticker can be easily removed and therefore does not have a "permanent" character.
Consumables such as wine and chocolate are always business gifts, even if they have a sticker on them.
The same rules apply here as for promotional gifts to customers & other business relations.
Tip: give one promotional gift per year per employee of less than €40 incl. VAT (possibly increased for dependent children or special events) with the logo of your company clearly & permanently stated, because then the gift falls under the promotional items. Not only is the gift then 100% tax deductible, but the VAT is also 100% recoverable!