End of year is approaching: rules of the game for gift vouchers

Written by Bart Elias 2 December 2015


One option to reward employees in a tax-friendly manner at the end of this year is to provide them with a gift, i.e. gifts in kind or in cash, or vouchers for books, sporting and cultural events, movies, etc.

As a general rule, gifts are in principle considered as remuneration and thus subject to social security contributions and taxes. A bottle of champagne or even a fruit basket, we experienced social inspections where these boxes were standing in the corridors before being distributed and… were recharacterised into salary.

However, provided certain conditions are met, a gift voucher will not be considered as remuneration and thus will not be subject to social security contributions or taxes. In this case, the gift voucher will be interesting for both the employer and its employees:

  • a fully deductible business expense for the employer, and;
  • a tax-free benefit for the employee.

Conditions

Firstly, the gift voucher must be granted to all employees. Gift vouchers must have an insignificant value and should be granted for a clear purpose and not as compensation for services rendered. Furthermore, the following specific conditions must be met for gift vouchers:

  • the gift voucher must be used within one year’s time;
  • the gift voucher can only be used in stores that have concluded an agreement with the company issuing the voucher;
  • the gift voucher cannot be exchanged for cash;
  • each employee must be granted the same benefit.

Please note that the gift vouchers for Saint-Nicholas Day, Christmas and the New Year may not exceed EUR 35 per year (to be increased by EUR 35 per dependent child).

An example:

An employee with three dependent children can receive four gift vouchers of up to EUR 35 per year, i.e. three for his or her dependent children for Saint-Nicholas Day (6 December), Christmas or New Year and one for himself/herself for Saint-Nicholas Day (6 December), Christmas or New Year.

Separate rules apply for cultural and sports vouchers.

Sanctions

Please note that if any of the above conditions are not met or if the vouchers are granted on occasions not provided for by law, social security contributions and taxes will be due on the total value of the gift or gift voucher.

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