The Do’s and Don’ts of Corporate Gifting: A Tax and Accounting Perspective

Corporate gifting can be a powerful tool to show appreciation to employees, clients, and stakeholders, especially during festive seasons. However, navigating the tax rules around corporate gifts can be tricky. This guide explores the do’s and don’ts of corporate gifting with a focus on tax-deductible expenses, compliance, and common-sense practices.

The Do’s of Corporate Gifting

1. Understand What’s Tax-Deductible

●  Small Benefit Exemption: In Ireland, gifts such as vouchers up to €1,000 per employee (for 2024) are exempt from Benefit in Kind (BIK) tax. This increases to €1,500 from January 1st, 2025.

●  Promotional Items: Gifts that promote your brand (e.g., branded pens, mugs) are typically tax-deductible as advertising expenses.

●  Advertising Goods Over €20: If the gift includes your company name or logo and is for promotional purposes, VAT may not apply even if the cost exceeds €20.

2. Use High-Quality and Relevant Gifts

Opt for gifts that reflect your brand values and are meaningful to the recipient. Curated hampers, eco-friendly items, or products from local businesses are thoughtful and compliant options.

3. Include Personal Touches

Adding a handwritten note or a personalized message can elevate the value of your gift without additional tax implications.

4. Keep Records for Compliance

Maintain proper documentation for all gifts, including invoices, recipient details, and the purpose of the gift. This ensures easy reporting and avoids penalties.

5. Be Aware of VAT Rules

For gifts exceeding €20 (excluding VAT), the VAT must be accounted for unless they fall under the promotional or advertising goods category.

The Don’ts of Corporate Gifting

1. Avoid Cash Gifts

Cash gifts are always taxable and do not qualify for the Small Benefit Exemption. Instead, use vouchers or prepaid credit cards within the allowable limits.

2. Don’t Exceed Limits Without Planning

If you want to give a gift worth more than €1,000 per employee in 2024, be prepared for the excess to be subject to BIK tax and employer PRSI.

3. Stay Clear of Offensive or Inappropriate Gifts

Always exercise sensitivity and ensure the gift aligns with professional standards. Avoid politically charged, culturally insensitive, or overly personal items.

4. Avoid Gifting Multiple Small Items Over Time

Even if individual gifts are under €20, a series of gifts to the same person may still be subject to VAT. Plan carefully to stay compliant.

5. Don’t Ignore Employee-Director Rules

If your spouse is a director but not a salaried employee, they are not eligible for tax-exempt gifts. Consider paying a salary or director’s fee to make them eligible for vouchers under the Small Benefit Exemption.

What is a Tax-Deductible Corporate Gift?

●  Tax-Deductible: Gifts used for business promotion, like branded items or low-value goods under €20 (excluding VAT).

●  Non-Deductible: Cash gifts, high-value luxury items without promotional intent, and gifts that exceed allowable exemption limits.

Key VAT Rules for Gifts

●  Gifts Below €20: Exempt from VAT if not part of a recurring series to the same recipient.

●  Promotional Items with Branding: Exempt from VAT regardless of cost if used solely for advertising purposes.

●  VAT Rate: The applicable VAT rate depends on the type of gift; check Revenue’s VAT database for specifics.