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 can have a partly private element, they are not fully deductible. You can still include much of this expenditure in your profit calculation, provided you apply the tax rules correctly.
Deducting corporate gifts from profit
The expenditure must be for business purposes. The 80% option below relates to income tax; different rates and conditions apply to a private limited company. First, determine which VAT is deductible. Deductible VAT is not included in the costs, whereas non-deductible VAT is.
The 80/20 rule
For income tax purposes, you may opt for the 80% deduction for the relevant mixed business expenses. With expenses of €1,000, this amounts to an €800 deduction from taxable income, not an €800 tax refund.
Threshold amount of €5,700
Alternatively, in 2026 you deduct the amount above €5,700. With €6,000 in costs, the deduction is €300. Add up all costs under this scheme: you do not get a separate threshold for gifts, lunches and representation. Compare both methods on the combined annual total at limited deductible expenses.
Deduct VAT on corporate gifts
Add up the expenditure, excluding VAT, per recipient per financial year. If you exceed €227 and the recipient would be able to deduct less than 30% of the VAT if they had purchased the item themselves, then the VAT on those gifts is not deductible. Up to a maximum of €227, deduction remains possible provided you meet the other VAT deduction conditions.
This is a VAT threshold, not a limit on your business expenses. Check the beneficiary's condition and the calculation per beneficiary. You correct previously deducted VAT that turns out not to be deductible.
Example: two gifts to the same contact
Hypothetical scenario: you give one business contact business gifts worth €150 and €100, excluding 21% VAT. The recipient cannot deduct VAT themselves. The annual total is €250; the €52.50 VAT is not deductible. Your business expenses are therefore €302.50. Under the 80% method, you deduct €242 from your profit. This does not constitute a refund of €242.
Which corporate gifts are tax-deductible
Business gifts may fall under the deduction restriction. Think of small promotional items, a Christmas gift or a token of appreciation for a completed assignment. The Dutch tax authorities mainly assess the business motive: if the gift contributes to your enterprise, it falls under representation costs.
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 vessels for representative purposes
Assess the actual purpose and character of the gift. A logo does not automatically make a gift fully deductible advertising. Keep a record with the invoice stating who the gift was for and why it is business-related.
How much can you spend on corporate gifts
There is no separate tax purchase limit for each business gift. However, the rules regarding business purpose, profit deduction, and VAT deduction do apply. The €227 test relates to the annual total per beneficiary and must be assessed together with the recipient condition.
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 the invoice, date, payee and business purpose, and keep track of the annual total per payee.
With clear records, you can easily prove that your business gifts were business-related. This makes the tax return clear and prevents corrections afterwards.
View which administration and returns are included in our accounting package.
