In our newsletter of 27 November, we recalled the possibility to present employees with year-end gifts, free from social security contributions and income taxes. We mentioned that, although the maximum amount of those gifts for social security purposes was increased in July, the income tax amount was not yet adjusted accordingly. However, on 5 December, the tax authorities modified their administrative guidelines in this respect, for gifts presented to employees as from 1 January 2018.
Year-end gifts
According to the tax authorities’ newly adjusted administrative guidelines, gifts in kind, cash or voucher that are attributed to employees for the occasion of Saint Nicholas, Christmas or New Year’s and that do not exceed EUR 40 per employee per year, are deductible as professional expense by the employer and not taxable in hands of the employees. This amount can be increased with another EUR 40 per year for each dependent child.
The above adjustment brings the tax authorities’ administrative guidelines fully in line with the social security regulations on this matter. The new income tax thresholds are applicable for gifts awarded as from 1 January 2018.
Gifts for special occasions
Gifts in cash, kind our voucher can not only be awarded for the occasion of the year-end festivities, but also for a number of other special occasions. The maximum amounts of these gifts were also increased by means of the 5 December update of the tax authorities’ administrative guidelines, to conform them with the earlier social security increase in this respect.
As such, if an employee is awarded a gift for one of the below occasions and the corresponding maximum amounts are respected, these amounts can be attributed free from social security contributions and income taxes and can be deducted by the employer as a professional expense.
| Occasion
|
Maximum amounts as from 01.01.2018
|
Previous maximum amounts
|
| Saint Nicholas, Christmas or New Year’s
|
EUR 40 per employee per year, which can be increased with another EUR 40 per year for each dependent child
|
EUR 35 per employee per year, which can be increased with another EUR 35 per year for each dependent child
|
| Award for merit
|
EUR 120 per employee per year
|
EUR 105 per employee per year
|
| Pensioning
|
EUR 40 for each year of service with the employer, with a minimum of EUR 120 (and a maximum of EUR 1.000 which only applies for social security purposes, but not for income tax purposes)
|
EUR 35 for each year of service with the employer, with a minimum of EUR 105 (and a maximum of EUR 875 which only applies for social security purposes,but not for income tax purposes)
|
| Marriage or legal cohabitation |
EUR 245
|
EUR 200
|
Entry into force
The newly adjusted income tax thresholds as detailed above are applicable for gifts awarded as from 1 January 2018.
