Rewarding employees builds commitment, increases motivation, and improves the employee experience. How to reward employees in different situations tax-free? Check out our information kit based on the Tax Administration's guidelines on employee gifts.
1. A gift for the whole staff
The most traditional way to remember employees with a gift is usually a seasonal gift, such as a Christmas or summer gift, given to all staff. Companies often remember their staff collectively, for example at Christmas or at joint events. To be tax-free, a gift to all staff must meet certain conditions.
The gift must be collective (i.e. the same for all staff)
When the same gift is given to all employees with the same value, the Tax Administration's requirement that the gift be collective is met.
The value of the gift must not exceed 100 € per year
The gift tax exemption applies if the value of the gifts given to the employee does not exceed 100 € in a calendar year.
The choice of the gift must be limited
If a gift card is chosen as a gift, the choice should be limited to specific products or services (compare, for example, the unidentified gift cards in department stores, which can be used to buy anything in the store). As long as the range of the gift card is limited, each employee is free to choose their own gift.
The gift must be chosen by the employer
The employer must choose an item, service or personalized gift card as a gift (i.e., when the employer has chosen a specific company product). Please note that a freely chosen item or service, or the ability of the employee to choose a gift from options predetermined by the employer, does not make the gift taxable. In addition, money gifts or gifts compared to money are comparable to an employee's salary, which does not qualify for tax exemption.
2. A gift on the employee's special day
Employees are also often remembered on their personal anniversaries, which are also entitled to tax exemption.
It must be the employee's birthday, wedding anniversary, anniversary of long service or retirement.
The Tax Administration specifies that "An employee's normal anniversaries include birthdays such as 40, 50, 60 and 70. Other anniversaries of an employee include a wedding anniversary, a long service anniversary (10 years or more) and retirement."
The reasonable value of a gift is the equivalent of 1-2 weeks' gross salary.
The reasonable value of a gift given to an employee on their anniversary is the equivalent of 1-2 weeks' gross pay. However, if the employer has a well-established practice of giving anniversary gifts, the value of the gift cannot vary between employees.
The gift is chosen by the employer and its use is limited
The gift given on the anniversary date must also be chosen by the employer and limited to a specific item, service, or personalized gift card. Other freely selectable gifts are transactions equivalent to money, i.e. an employee's salary, which does not qualify for the exemption.
3. A gift to mark the anniversary of the employer, i.e. the company
Is your business reaching years? Congratulations, that is something to celebrate!
The Tax Administration determines that the employer's milestone anniversaries that qualify for a tax-free gift are anniversaries related to the age of the company. This means that, for example, the completion of a work project does not count as an employer's anniversary.
The value of the employer's anniversary gift cannot be the same as the value of the employee's anniversary gift (1-2 weeks' gross salary).
The value of a gift given by the employer to an employee to mark the employer's anniversary cannot be as high as the value of the gift the employee receives on the employee's own anniversary. The value of the gift is also affected by whether the gift is given to mark, for example, the tenth or hundredth anniversary of the company.
The gift must be the same for the whole staff.
The value of the employer's anniversary gift must also be the same for all staff and must also meet the other conditions for tax exemption for staff gifts (see 'A gift for the whole staff').
Read more on the Tax Administration's website (188.8.131.52.)
4. A farewell gift or other remembrance
Employers may want to remember their employees with gifts not only on anniversaries but also on other occasions.
The gift must be collective.
Among other gifts given by the employer, only so-called minor gifts are tax-free if they are given - as usual - collectively to all staff.
The gift must be given in a form other than money or a comparable consideration
The Tax Administration defines "minor other gifts" as "small remembrances given mainly to all staff at Christmas. For example, a farewell gift may also be a minor other gift if the giving practice applies to all staff." It is also specified that a minor gift received by an employee is exempt from tax if it is received in a form other than money or a similar consideration and the practice applies to all staff.
The value of the gift must not exceed 100 € per year
The value of a minor gift can be up to 100 €. If an employer gives employees several 'small gifts' per year, the total value of these gifts cannot exceed 100 €. The gift can be an item or service chosen by the employer, or a personalized and individual gift card entitling the employee to choose a product or service from a range of products or services (such as Delicard®).
Delicard® makes it easy to reward employees tax-free
Delicard® is a gift card that allows you to reward your employees tax-free. This makes gift shopping not only hassle-free, but also cost-effective. The Delicard® gift card range includes high-quality and responsible products from fishing gear to Finnish design, from jewellery to camping and cooking equipment, as well as intangible gifts. The range of intangible gifts includes streaming services, magazine subscriptions, gym memberships and donations to charity.