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Now it’s finally time again for that wonderous time of the year when lots of questions start coming in about what applies to Christmas gifts to employees. Since our customers are so generous that they want to give their employees Christmas gifts (If we ignore the fact that most of our customers only have themselves as employees!), we thought we should be so generous that we explain how it works.
Christmas gifts to employees (including shareholders) are tax-free if the value does not exceed SEK 500 including VAT. The Christmas gift cannot be money, or gift cards that can be exchanged for money. In order for the Christmas gifts to be tax-free, they must also be given to all, or at least a larger group of, employees, and not just selected people. So, don’t think about giving a gift only to yourself and not your employees!
Common questions about Christmas gifts to employees
- What if the Christmas gift costs more than SEK 500? The entire gift becomes taxable, not just the part that exceeds SEK 500.
- Can you give Christmas gifts to board members? Yes, you can do that. However, not to deputy directors if they have not been active or performed any work.
- Does this also apply to sole trader firms and trading partnerships? Unfortunately only for your hired employees, if you have any, and not for yourself.
- What if the Christmas gift is a contribution to charity? If you, as an employer, decide which cause the gift should contribute to, the gift is tax-free if it does not exceed SEK 500. If the employee is allowed to determine the cause, the gift is equated with cash, and therefore taxable.
- How do I know if the gift cards can be exchanged for money? To know this, you need to ask the person selling the gift card. Be careful that the person you ask actually knows the answer and isn’t just guessing.
- In the past I have heard of Christmas gifts for SEK 2,500, is it really only SEK 500 that is tax-free? There were special rules that applied during the years with the pandemic, and then you could combine “Corona gifts” with Christmas gifts and then give tax-free Christmas gifts up to and including SEK 2,500. This no longer applies in 2023.
So, take this opportunity to show your appreciation to yourself and your possible employees! Christmas gifts to customers and suppliers are not normally tax-deductible, but Christmas greetings are free and therefore tax-free! 🙂