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#Tax & Legal #HR Legal #Gift Vouchers #Taxation

What kind of gift vouchers can you use to give tax-free rewards to your employees?

Wednesday 25/11/2020

Many employers like to reward their employees from time to time for their hard work or on the occasion of a special event. Owing to high labour costs, various types of gift vouchers are often used as an alternative. The following is an overview of the various options available.

General taxation arrangements pertaining to gift vouchers

In principle, gift vouchers (gift, surprise, film, book vouchers, etc.) are regarded as taxable benefits in kind for all employees who receive them and are consequently deductible as business expenses for the relevant employers.

However, the administration considers the vouchers a non-taxable social benefit for the employee, provided that a number of conditions are met:

  • the voucher has a small value, i.e. the administration considers a maximum amount of € 50.00 as "small";
  • the voucher is awarded for a specific social purpose.

Compliance with these conditions has two consequences: firstly, as mentioned above, the vouchers are not taxable as pay on the part of the employee. Secondly, the cost of these gift vouchers is, therefore, in principle not deductible as an expense by the employer. Several of these low-value gifts can be allocated each year to the same employee, but there must always be a social purpose (opportunity) for the award.

The administration also works with specific gift voucher arrangements whereby a higher amount can be paid out, but they are always subject to (strict) conditions.

Specific gift vouchers arrangements

Sports and culture vouchers 

Conditions associated with sports and culture vouchers in order to be considered a non-taxable social benefit for the employee and exempt from social security contributions:

  • Vouchers shall not be awarded in lieu of remuneration;
  • They shall be awarded on the basis of a Collective Labour Agreement;
  • Voucher shall be named;
  • They shall have a limited validity period of 15 months;
  • Maximum € 100.00 per annum per employee;
  • Vouchers shall not be exchangeable for cash.

Provided that sports and culture vouchers comply with the above-mentioned conditions and do not constitute taxable pay for the employee, the cost shall not be tax-deductible for the employer. 

Saint Nicholas, Christmas or New Year vouchers

Vouchers or gifts of this kind shall constitute a non-taxable social benefit for the employee if:

  • The amount does not exceed € 40.00 per employee;
  • All members of staff or an objective category of employees receive the same benefit;
  • An additional amount of € 40.00 per annum per dependent child may be granted to the employee on the occasion of St Nicholas, Christmas or New Year.

If the above conditions are complied with, the cost will also be deductible for the employer. 

Marriage (and declaration of legal cohabitation)

In such cases, a tax exemption of up to € 200.00 shall apply for each employee who gets married or submits a declaration of legal cohabitation. The part of the contribution/voucher which exceeds this limit will be regarded as taxable pay for the employee.

However, the exempted marriage premium can be combined with other exempted gift vouchers awarded during the same year.

The exempted amount of € 200.00 is also a deductible expense for the employer. 

Gift vouchers for an honorary award or retirement

These vouchers shall be considered exempt from social security contributions and non-taxable social benefits for the employee if the following conditions are met:

  • Honorary award: honorary award vouchers shall not be taxable for the employee provided that they do not exceed €120.00 per employee.
  • Retirement: these vouchers shall not be taxable provided that they do not exceed € 40.00 per complete year of service for the employee, with a minimum of € 120.00.

Provided that the above-mentioned conditions are met, this represents an exempt social benefit for the employee as well as a deductible expense for the employer. 

Subscriptions or tickets for cultural or sporting events 

Subscriptions or tickets for cultural or sporting events such as concerts, the opera, theatre, football, etc. which are issued at reduced prices or distributed free of charge to staff, shall be regarded as exempt social advantages for employees. Unlike the other gift vouchers, they are not subject to a maximum amount.

As far as the employer is concerned, this is subject to the general rule of social benefits, i.e. that it is a non-deductible expense.

Please note! If these subscriptions or admission tickets are not classed as sports and/or culture vouchers, the benefit shall be subject to social security contributions for both the employer and the employee.

Consumer vouchers

A new voucher has been created as a result of the COVID-19 crisis. Consumer vouchers must be awarded before 31 December 2020 and must not exceed a maximum of €300. They shall be valid, i.e. employees will be able to use them, until 7 June 2021. 

Consumer vouchers can only be spent on hospitality, culture and sports. They cannot be used, for example, to buy cinema tickets or sports clothing. However, employees can use these vouchers to attend a theatre performance.

Consumer vouchers are exempt from social security contributions and tax. They are also deductible in terms of corporation tax

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Saskia Lombaerts
Saskia Lombaerts
Director Tax & Legal
Karolien Vanmeerhaeghe
Karolien Vanmeerhaeghe
Senior Manager Tax & Legal Services