Christmas gift – deductible or not?
During the fall, many companies plan Christmas parties, book Christmas dinners, and organize Christmas gifts. What are the rules exactly? Which Christmas gifts to employees and customers are tax-deductible? Here, we go through the rules for tax-free Christmas gifts and what you should consider before the Christmas party and Christmas dinner.
Christmas gifts for employees and customers:
Companies, regardless of size, can give Christmas gifts to their staff. To be tax-free for the employee, the Christmas gift must cost a maximum of 550 SEK, including VAT. If the cost exceeds this limit, it becomes a taxable benefit. Freight costs are not included in the value. Christmas gifts for customers are not tax-deductible. However, simpler promotional gifts of lesser value directly related to the company’s business may be deductible.
Christmas gift for self-employed:
A sole employee in a limited company can receive a Christmas gift, while a sole trader cannot deduct a Christmas gift for themselves. However, a sole trader can give tax-free Christmas gifts to their employees.
What kind of Christmas gifts can you give?
The Christmas gifts for employees can be varied. You cannot give money or anything that can be converted into money, but non-convertible gift cards are allowed. Similarly, gift cards for home and cleaning services can be tax-deductible. The gift must be the same for all employees to be considered tax-deductible.
Examples of deductible Christmas gifts include candy, cinema and theater tickets, gift cards for interior stores, books, or audiobook subscriptions, restaurant gift cards, and spa visits.
Charity as a Christmas gift is not tax-deductible. If you donate money to charity instead of Christmas gifts, employees will not be taxed, but no deductions are allowed for the company.
Christmas dinner and Christmas party – deductible or not?
Christmas dinners and Christmas parties are recurring events for many companies and a perfect way to show appreciation to employees! However, the deductible opportunities may be somewhat limited.
Costs related to a staff party are deductible for a maximum of two occasions per year, with the Christmas party often being one of these occasions. If the Christmas dinner is connected to a staff party, you can deduct a maximum of 60 SEK per person. Various ancillary costs such as music entertainment, venue rental, and performances are deductible at 180 SEK + VAT per person.
Any overnight stays and travels associated with a Christmas party in another location are deductible if it is for a maximum of one night. The VAT on this is always deductible.
Inviting customers to a Christmas dinner, however, is not a deductible expense for the company.
Can relatives join the Christmas dinner?
Yes, if the Christmas dinner is part of a staff party, retired employees and family members of the staff can also attend. The company can deduct expenses for them as well.
More information: Skatteverket.se (only in Swedish)
If you need assistance with your bookkeeping or have questions related to Christmas gifts and parties, feel free to contact us:
Jens Rönnholm, jens.ronnholm@administer.se , +46 70 47 46 0 41