Tax system for corporate gifts
Newsletter - December 2021
The deduction of VAT on corporate gifts is governed by rules that are separate from those that apply to tax on profits.
Can VAT on corporate gifts be recovered?
As a rule, when a good is sold free of charge or at a price that is much lower than its normal price, the VAT paid on the purchase price or cost price is not deductible: the admission coefficient is zero.
Only moveable tangible property is covered, excluding any service.
As an exception, VAT is deductible for gifts whose unit value does not exceed, as of 2021, the sum of 73 Euros, inclusive of taxes, per year and per recipient. The amount, including taxes, must include the distribution costs to be borne by the company (particularly postage and packaging).
This amount will be reassessed from 1st January 2026.
It is important to note that the VAT pertaining to the advertising-related objects is also deductible. It also covers the advertising-related objects and materials intended for the promotion, sale, storage or presentation of its products, which a manufacturer or distributor gives free of charge to the members of its marketing network, irrespective of the value of these objects and materials.
Are corporate gifts deductible from taxable profits?
Corporate gifts constitute charges deductible from the taxable income on the double condition that they are made in the direct interest of the company’s activity and that their value is not exaggerated.
Failing this, the expenses may be included again in the company’s taxable income.
When the total amount of the deductible corporate gifts exceeds €3,000 per financial year, the gifts must be entered into the detailed statement of general expenses.
Failure to prepare a statement of general expenses is penalised by a fine of 5% of the amount of the sums that are not included in the statement. This rate becomes 1% when the amounts are actually deductible.
It is important to note that in case of a first offence committed during the current calendar year and the previous three years, the fine is not applicable if the companies have remedied their omission spontaneously or at the first request of the administration before the end of the year that follows the one during which the statement had to be presented.
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