You want to thank the people you often work with by sending them a bottle of champagne. You’re sending your clients, or better yet, potential clients a spectacular mug with your logo on it in hopes of a future collaboration. These are two examples of promotional gifts you can send to promote your company.
Totally deductible?
While these are definitely business costs, you can’t fully deduct them for your company. According to the tax authorities these are mixed costs: business costs with a private nature. Similar to the costs for food and drinks you have to make up for the private part of the costs in your tax declaration. There are two ways to do so:
1. The first €5.600 is not deductible. Everything above that amount is fully deductible.
2. The costs are deductible for 80% (73,5% in the VPB, corporation tax). This means you have to add 20% of the costs of the promotional gifts to your income in your tax declaration.
And how about VAT?
Whether you can deduct VAT on business gifts is quite complicated. You may deduct the VAT when you spend no more than €227 per business relation on business gifts. If you exceed this threshold, you can only reclaim the VAT on a business gift if the recipient would also be entitled to deduct the VAT themselves.
An example:
Let’s say you send your web designer a restaurant voucher worth €250. The cost of the voucher exceeds €227, and the web designer cannot declare the cost of a restaurant visit as a business expense. Therefore, the VAT is not deductible. However, if you give a fancy mouse worth €300 (what is a web designer without it?), these are expenses that he could also declare as business-related. So, if you give this to him as a business gift, you can deduct the VAT on these expenses.
