Christmas is approaching, and perhaps you are busy buying Christmas presents for your employees. But did you know that different tax rules can apply depending on what kind of gift you buy? Read on and get to grips with the rules, both for Christmas presents and other types of company gifts
Gifts in kind and Christmas presents – Be aware of different rules
Gifts in kind
You can give an employee company gifts in the form of gifts in kind worth up to DKK 1,300 a year including VAT without the gifts being taxed. The DKK 1,300 is known as the de minimis limit, and the rate is updated every year. So remember to check the de minimis limit again next year, as it may be different.
If the company gifts given during the year have a total value of more than DKK 1,300, all the gifts will be taxable. If the value of the gifts is under DKK 1,300, no tax has to be paid on them. If cash is given as a gift, it is always taxable, whatever the amount.
Christmas presents
Gifts in kind with a market value of under DKK 900, given as a Christmas present, can be kept out of the overall total for company gifts. These gifts are therefore not taxable, no matter how many other company gifts have been given during the year.
If the value of a Christmas present is DKK 901 or more, the gift is taxable, provided other company gifts have been given during the year and the total value of all the gifts exceeds DKK 1,300.
The amounts can change from year to year, so it is important to keep yourself informed. This blog post uses the updated rates for 2023, and otherwise you can keep up to date on SKAT's website.
Gift cards have separate rules
As a general rule, gift cards are taxable and are taxed in the same way as the employee's ordinary salary. There are, however, a few exceptions in the form of online gift cards for predetermined gifts, or gift cards for a specific restaurant or a stay at an inn.
These gift cards will not count towards the de minimis limit for ordinary company gifts. Be aware that it is a requirement that the gift cards cannot be exchanged for cash. Read more about the exceptions.
There are also gift cards that are always taxable. These include gift cards that can be exchanged for cash, or gift cards that can be used for a wide range of things. Read more about the tax rules for gift cards.
If an employee has an anniversary
As a starting point, anniversary gifts to employees are taxed in the same way as salary. There are, however, a few exceptions: if an employee has a 25th, 35th, 45th or 50th anniversary, the company can give that employee a gift worth up to DKK 8,000 without it being taxable.
If the company celebrates an anniversary of at least 25 years, it can give its employees gifts worth up to DKK 8,000. For this to be tax-free, however, the company must give the same gift to all employees. In that case, the company can deduct the full amount as operating costs. The company can also give a severance payment of up to DKK 8,000 tax-free.
For private occasions, such as a milestone birthday, a wedding or the like, you can give occasional gifts that do not count towards the de minimis limit of DKK 1,300. This applies to gifts of modest value that are appropriate to the occasion on which they are given. There is no fixed amount limit for occasional gifts, so be aware of this, and check with Skat if you are unsure whether the gift is of an appropriate value.
