Many companies wish to reward their employees periodically for their hard work or on occasion of a special event. But in view of the high wage costs, the various available forms of gift vouchers are an oft-used alternative. Below we provide an overview of the various options.
1. General taxation regime for gift vouchers
Gift vouchers (gift vouchers, surprise vouchers, cinema vouchers, book vouchers, etc) are in principle considered to be taxable benefits in kind on the part of the employees that receive them. Consequently, they are also deductible by the employer as a professional expense.
However, the tax authorities will treat the vouchers as a non-taxable social benefit on the part of the employee if a number of conditions are met:
1] the voucher is of a small value. The authorities consider ‘small’ to be any value up to €50.00;
2] the voucher is awarded for a clear social purpose.
There are two consequences when these conditions are satisfied. Firstly, the vouchers are – as stated above – not taxable as salary on the part of the employee, and secondly the expenditure on these gift vouchers is thus in principle also non-deductible as an expense on the part of the employer. Multiple gifts of small value can be awarded throughout the year to the same employee, but there must always be a social purpose (an occasion) for doing so.
The tax authorities have provided for a few other specific gift voucher regimes under which a larger sum can be awarded, but they are all subject to (strict) conditions.
2. Specific gift vouchers - regimes
- Sport and culture vouchers
The conditions for sport and culture vouchers to be considered a non-taxable social benefit on the part of the employee:
- The vouchers are not awarded in lieu of wages;
- They are awarded on the basis of a collective employment agreement;
- The vouchers are in the name of the employee;
- They are valid for no longer than 15 months;
- The maximum value per year per employee is €100.00;
- The vouchers are not exchangeable for cash.
When the sport and culture vouchers meet the above conditions and do not constitute taxable salary on the part of the employee, then the expenses are not tax-deductible by the employer.
- Vouchers awarded on occasion of St Nicholas’ Day (Sinterklaas), Christmas or New Year’s or for another patron saint’s day commonly celebrated by a profession
These vouchers or gifts constitute a non-taxable social benefit on the part of the employee if:
- The sum does not exceed €35.00 per employee;
- All staff receive the same benefit;
- An additional sum of €35.00 per year can be awarded for each child that is a dependant of the employee on occasion of St Nicholas’ Day, St Martin’s Day, Christmas, New Year’s, etc
If the above conditions are met, the costs therefore are deductible by the employer.
- Marriage (and declaration of legal cohabitation)
The tax exemption in this case is up to €200.00 per employee who is to marry or sign a declaration of legal cohabitation. That part of the bonus/voucher that exceeds this limit is however considered to be taxable salary on the part of the employee.
The exempted marriage bonus can however be combined with other exempted gift vouchers that are awarded in the same year as the wedding.
The exempted sum of €200.00 is once more a deductible expense for the employer.
- Gifts or gift vouchers awarded for honourable distinction or retirement
These vouchers are considered to be a non-taxable social benefit on the part of the employee if they meet the following conditions:
- Honourable distinction: vouchers awarded because the employee has achieved an honourable distinction are not-taxable on the part of the employee if they do not exceed €105.00 per member of staff.
- Retirement or becoming part of a combined unemployment and company supplement scheme: these vouchers are not taxable if they do not exceed €35.00 for each year of service completed by the employee, with a minimum of €105.00.
- Death of an employee: vouchers awarded to family members of the deceased employee are not taxable for sums from €35.00 upwards for each year of service completed by the employee.
When the above conditions are met, it not only means that it is an exempted social benefit for the employee, it is also a deductible expense for the employer.
- Season tickets or tickets to cultural or sports events
Season tickets or tickets to cultural or sports events such as a concert, opera, play, football, etc, that are granted at discount prices or free of charge to the staff are considered to be an exempted social benefit on the part of the staff. As opposed to other gift vouchers, no maximum sum applies to these.
For the employer the general rule for social benefits applies here, being that this is a non-deductible benefit.