As an employer, are you aware of the rules for taxing Christmas gifts for your employees?

If not, read on to understand exactly how they work.

Threshold for gifts in general

The annual tax-free threshold is DKK 1,200. It should be noted that the Christmas gift counts towards this amount, which you can give gifts for in a year without your employees being taxed.

Christmas gifts for your employees

As mentioned, the Christmas gift also counts towards the DKK 1,200, but what's special about the Christmas gift is that it's not taxed if it has a value of maximum DKK 900. Even if the total amount exceeds DKK 1,200.

If employees have received no gifts other than a Christmas present, it must have a maximum value of DKK 1,200 to be tax-free.

If you as an employer give your employees gifts worth more than DKK 1,200, you must report the entire amount to the Danish Tax Agency. The expense can be deducted as an operating expense, regardless of whether the value exceeds DKK 1,200 or not.

What about gift cards?

Gift cards are characterized as cash salary. Therefore, gift cards will generally be taxable. However, if the gift card is customized for specific products, they can be tax-free.

Examples of TAX-FREE gift cards: 

  • Gift cards that are only valid for a few selected gifts from an online retailer
  • Gift cards where the employer has pre-selected the gift for the individual employee
  • The gift card, which is for a specific named restaurant where it can only be used for the three-course menu of the day or for one of two three-course menus pre-selected by the employer

Examples of TAXABLE gift cards: 

  • Gift cards that can be exchanged for cash
  • Digital gift cards, e.g. plastic cards
  • Gift cards with a wide range of uses
  • Experience gift card


Christmas gifts for your customers

The nature of the gift determines whether you can deduct gifts to your customers for tax purposes. It is divided into two categories:

Promotional gifts
You can deduct 100% of both tax and VAT when it comes to promotional gifts.

What is a promotional gift?

  • It is NOT edible or drinkable
  • Has a value of max. 100 kr. ex. VAT
  • Have your company logo/name on
  • Manufactured in larger quantities

Examples include: coffee cups, pens, towels, tote bags, calendars, etc.

Representation
You can deduct 25% of the tax from the total cost including VAT, but no part of the VAT.

What is a hospitality gift?

  • It can be eaten or drunk
  • Has a value of max. 100 kr. ex. VAT
  • Have your company logo/name on

Examples include: wine, beer, chocolate, gift baskets with food and drinks, coffee, wine, etc.

Do you need help?

You are also welcome to contact us by phone +45 3929 0800 or write to us buusjensen@buusjensen.dk