Vill du läsa artikeln på svenska? Klicka här
Many employers during Christmas treat their employees and clients to both Christmas gifts and holiday parties, but there are some regulations you need to be aware of to ensure it is correct from a tax perspective. This is to avoid repercussions through a taxable benefit for your employees.
Christmas gift for employees as an employer
You have the right to deduct for Christmas gifts for your staff. Giving a Christmas gift is not mandatory, but it is one of several ways employers can show appreciation to their employees. Normally, the deductible and the threshold for tax liability for Christmas gifts are 500 SEK. To apply the rules of tax exemption, gifts should be given to all employees or to a larger group of employees. The Christmas gift can essentially be anything except money.
Donating to a charitable organization
Many employers believe that they enhance their role as an attractive workplace by choosing to donate money, for example, to a charitable organization instead of giving a Christmas gift. Unfortunately, such donations are not deductible for the company.
If the company gives money to employees with the expectation that they will then donate the money, it becomes taxable for the employees, even if the entire amount is donated immediately. If, as an employer, you instead donate an amount to a charitable organization that you have chosen and inform the employees that this is instead of giving them a traditional gift, the employee has no influence over the gift, and no taxable benefit is applicable.
Christmas gift for customers – stricter criteria for deductibility
To provide your customers with additional customer care, a Christmas gift can be part of it. However, as a general rule, Christmas gifts to customers are not deductible. Simple promotional gifts are acceptable, such as a calendar or pen with your logo on it, or products directly related to the company's range or production. In this case, the company should give these to a larger number of customers, not just a few.
The limit per gift is 300 SEK excluding VAT. Gifts more expensive than that may be considered bribes, which is illegal. In some industries, receiving gifts is not allowed at all, so check what applies to you to ensure your gift falls within the right parameters.
Social activities
Both Advent and Christmas are periods where the company has a golden opportunity to create camaraderie and show appreciation to employees by organizing various activities. This can range from a Lucia coffee break to a Christmas party.
Refreshments or simpler refreshments that do not replace a meal can be deducted at 60 SEK excluding VAT. Within this framework, it is perfectly fine to treat employees to cozy activities in the workplace.
Christmas party or christmas buffet
A Christmas party is a fun and often appreciated activity. Christmas parties for staff can be tax-free for employees according to the rules for staff parties. You can have a maximum of two staff parties per year, and there is no deduction for food, but the company has the right to a VAT deduction for costs up to 300 SEK per person. The company can get a deduction of up to 180 SEK excluding VAT for incidental costs for a Christmas party, such as entertainment in the form of music or renting a party venue.
If you want to treat your customers to a Christmas buffet, you can only do so if all the requirements for representation are met. For such an activity to be classified as representation, there must be a direct connection to business negotiations: time, person, and place must be met. In this case, a Christmas buffet with a customer may entitle you to a VAT deduction on a basis of up to 300 SEK per person.
Need help navigating the deduction jungle?
It's not easy to keep track of all the regulations or deductible costs. We at Azets understand these, and we are happy to assist companies in the Nordics with both accounting services and payroll administration.
Good luck with any Christmas gifts and holiday parties, and don't hesitate to reach out to us with any questions!
Subscribe to our newsletter
Stay updated on everything in accounting, payroll and HR and gain unique insights and advice from our articles. Fill in the form below to subscribe to Azets newsletter.
