Are gift cards for employees Tax-Free?

An investment to succeed

Employees wellness has become in the recent years a top priority for companies on both a country-specific and global level.

HR departments are investing a lot in talent acquisition, development, and retention: humans are no more resources, they are now investments to succeed.

New wordings have quickly spread inside HR offices: employee recognition, employee benefits, bonus for employees …

These are all replies to the same fundamental question: how can companies show their employees how much they care of them?

A highly appreciated way to do that is lying in corporate gift cards for employees. Companies allocate yearly budgets, that employees can spend as they wish among all the available options included in the employee recognition gift card program. This form of recognition as become really popular because of its broad appreciation from employees. In fact, they have the total freedom of choice in selecting their preferred gift cards, according to their own preferences, tastes, interest, and needs.

Clearly, gift cards bring many advantages to employees who are really satisfied with their reward. But what about companies? What are the advantages for companies?

Tax treatment of gift cards in Europe

This is the big question companies always ask: “are gift cards for employees tax-deductible?”

As it frequently happens, answers are different depending on the European country considered.

But let’s get deeper:

• Taxation of Gift Cards in Germany

Germany allows a discreet range of deduction on gift cards for employees. According to the Income Tax Act, non-cash benefits to employees up to 44 euros per month remain tax-free, as well as gifts up to 60 euros that are exempt from social security contributions.

In addition to the monthly amount of 44 euros, non-cash benefits of up to 60 euros remain tax-free if they are given to employees in the occasion of personal events. Where, “personal event” stands for birthdays, employees’ children births’ anniversary, etc. The bouquet of flowers as a welcome greeting after a prolonged illness also falls under this category.

• Taxation of Gift Cards in France

France admits tax deduction on gift card as corporate bonus, provided they do not exceed the yearly amount of € 171 per employee in 2020 (5% of the monthly Social Security ceiling).

Moreover, as we have seen for Germany, personal events play an important role in France too. In fact, employers can increase the non-taxable amount of non-cash bonuses given to their employees on personal occasions to celebrate. Marriage, retirement, birthday, beginning of the school year, Christmas, etc. are all events when French companies can reward their employees and sales force with gift cards and vouchers that are relevant for the celebrated occasion.

• Taxation of Gift Cards in the United Kingdom

Compared to the other countries in Europe, the United Kingdom allows a stricter tax-deduction policy on gift cards given to employees. In fact, only up to 50£ gift cards are tax-free for companies in UK, whereas exceeding amounts are completely taxed.

Another common rule on corporate gifts in UK, is that non-taxable gifts need to be categorized as “trivial benefits”, namely they need to be non-performance-based and there cannot be a contractual obligation to get and enjoy the gift.

• Taxation of Gift Cards in Austria

Austria has a broader policy about gifts and expense accounts that includes both corporate events for employees and individual corporate benefits.

Benefits from attending company events reach €365 per year (company excursions, cultural events, company festivities, etc.) and gifts and rewards received in such contexts amount to a maximum of € 186 per year. Austrian broader non-taxable treatment of gifts includes Christmas presents, gift vouchers or gold coins that are exempt from tax incomes.

• Taxation of Gift Cards in Poland

Poland yearly allocates a yearly budget in order to support companies in the corporate benefit distribution. Every year, the Company’s Social Fund, provides for a maximum of 1000 PLN per employee that is tax-free and that companies can spend in incentive and reward programs.

For now, in Poland vouchers and gift cards are left out from this tax-free policy that rules incomes on incentives and rewards, although there is great attention to this argument that may change in the very next future.

• Taxation of Gift Cards in Spain, Portugal and Switzerland

Companies in Spain, Portugal and Switzerland often choose gift cards and vouchers as corporate benefit and gifts, because of their extreme flexibility and appreciation by employees. However, there are no specific regulations yet on gift cards and gift vouchers.

Choose Your Gift Card Partner

To conclude, clearly there is a real convenience in choosing gift vouchers and gift cards for companies that are looking for successful ways of incentivizing their sales force. If you are a company in Europe looking for a partner, Amilon is the best option for you to make your employee benefit gift card program a reality. In no time you will get your employees satisfaction and recognition with our global assortment of more than 200 digital gift cards enjoying the tax-free policy that is enforced almost all over Europe.

 

Article written by Giuseppe Di Rienzo, International Sales Manager at Amilon