Taxation of corporate Christmas hampers, gifts and dinners: all you need to know
- 29 November 2023
- Business Consultancy
Christmas hampers and corporate gifts and dinners are still today a custom in many companies. This tradition involves not only employers and workers, but also the Tax Authorities, since they are considered a deductible item for Corporate Income Tax purposes.
Below, we explain the keys to the taxation of these expenses.
Can the company Christmas dinner or lunch be deducted?
In this case, two questions must be asked: Can VAT be deducted from the invoice? Is it deductible as an expense for corporate income tax purposes?
With regard to VAT, the VAT paid for self-consumption, lease or use, among others, of the following goods and services cannot be deducted:
- Food, beverages and tobacco.
- Goods or services intended for services to customers, employees or third parties. They shall not be considered as such:
- Travel, hotel and restaurant services, unless the amount of these is considered a tax-deductible expense for Personal Income Tax or Corporate Income Tax purposes.
What taxes affect the costs of Christmas hampers and gifts?
Those institutions that for years have made the detail of Christmas baskets one of their traditions, will be able to deduct their IS as long as they corroborate the above mentioned. On the other hand, if the continuity of this gift is not prolonged, the organizations will not be able to deduct these expenses. These falsified documents before a tax inspection would be a serious infraction. Likewise, it is necessary to check that this expense has not been accounted for as a personal expense in the payroll.
The workers must make sure of everything that includes its payroll and, later, in the ?certificate of retentions with the purpose of facilitating the preparation of the IRPF declaration. It is also possible to consult if they appear reflected in the data that the Tax Agency provides to complete the declaration.
In the case of the Christmas lottery given to clients and/or suppliers, it is deductible if the expense for public relations can be demonstrated. Therefore, it is essential to document the deliveries of this lottery.
Exceptions: free samples and advertising objects of low value
The VAT law stipulates that free samples together with advertising objects whose amount exceeds 200 € during a calendar year to the same recipient, will be deductible provided that they visibly bear the name of the entrepreneur who markets it or who offers certain services. It is advisable that the supplier's invoice includes the silk-screen printing.
For further information or to clarify doubts, do not hesitate to contact the Tax Department of CINC Asesoría.
