What are corporate gifts
Corporate gifts are business gifts that you give to customers, suppliers or partners to strengthen the relationship or show appreciation. Think of a bottle of wine, a Christmas package or a promotional item with your company logo. As long as the gift has a business purpose, the tax authorities consider it as representation expenses.
Because representation expenses partly of a private nature, they are not fully deductible. Still, you can include many of these costs in your profit calculation, provided you apply the tax rules correctly.
Conditions for deduction of corporate gifts
To deduct expenses for business gifts, they must be business-related. A gift to family or friends without a business motive is not deductible. You must also be liable to income tax or corporate tax as an entrepreneur.
Two methods apply to the deduction of business gifts. You choose the one most favourable to your situation each year.
The 80/20 rule
The 80/20 rule is the simplest method. Here, you may deduct 80 per cent of the expenses and 20 per cent remains non-deductible. For example, if you spend 1,000 euros on business gifts, you can deduct 800 euros.
For most self-employed people, this method is the most practical. You do not have to keep track of threshold amounts and know immediately what part you are allowed to process for tax purposes.
Threshold amount of €5,700
The second option is the threshold scheme. In 2025, a threshold of EUR 5,700 applies. Only the part of your entertainment expenses above this amount can be deducted. If you spend 6,000 euros, you may deduct 300 euros. If you stay below EUR 5,700, you are not entitled to a deduction.
This method is especially interesting for entrepreneurs who invest a lot in representation. For most self-employed people, however, the 80/20 rule remains the most advantageous choice.
Deduct VAT on corporate gifts
In addition to income tax, VAT also comes into play. You can only deduct VAT on corporate gifts if the value per recipient does not exceed EUR 227 excluding VAT per year.
If you stay below that limit, you may reclaim the VAT as input tax. If you go above it, then the right to deduct expires. If you previously deducted the VAT, you must correct this in your last VAT return of the year.
It is wise to keep track of the gifts you give to each customer or relation and their total value. This way, you avoid having to pay back VAT later.
Which corporate gifts are tax-deductible
In principle, all business gifts are deductible, as long as they have a clear business purpose. Think of small promotional items, a Christmas gift or an attention for a completed assignment. The tax authorities mainly assess the business motive: if the gift contributes to your company, it falls under entertainment expenses.
Non-deductible gifts
Not all gifts are deductible. Among others, the tax authorities exclude the following cases:
- Private gifts to family or friends
- Luxury spending with no business interest
- Excessive representation, such as expensive dinners with no business character
- Cost of using a vessel or other luxury object for representation
If you doubt whether a gift is deductible, ask yourself whether you would also give it without a business relationship. If the answer is no, then it usually counts as business.
How much can you spend on corporate gifts
There is no legal cap on how much you can spend on corporate gifts. However, the tax deduction is limited. If you spend little, the 80/20 rule is usually favourable. If you spend a lot, then the threshold rule can be more attractive.
In addition, the VAT limit of €227 per recipient is important. If you stay below that, you can deduct the VAT. If you exceed this limit, you lose that right. In this way, the tax authorities encourage entrepreneurs to deal responsibly with business gifts.
Accounting for business gifts
Careful administration is essential to properly apply the deduction.
- Use a separate expense item for entertainment in your accounts. This way you can immediately see the total amount of corporate gifts.
- Apply one method of deduction (80/20 or threshold) and be consistent in this.
- Check the VAT limit per customer or relation annually. Keep a record of what gifts you have given and what the value was.
- Keep all invoices and notes. Note who the gift was given to and for what business purpose.
With clear records, you can easily prove that your business gifts were business-related. This makes the tax return clear and prevents corrections afterwards.
Corporate gifts are an effective means of retaining clients and strengthening your network. By applying the rules correctly, you benefit from the tax advantage while doing business professionally and with care.
