In the month of December christmas gifts and baskets are the order of the day in companies,with the aim of making a gift to their employees, customers and suppliers to reward their loyalty. Baskets and gifts that are an important expense for companies, especially the largest ones, so it is not surprising that the following questionarises: do we have to declare the Christmas baskets?
The answer is yes, you have to declare the Christmas baskets. The reason is no other than the Christmas baskets and gifts of companies are a further remuneration, and therefore should be included in the declaration.
Why is VAT not deductible for Christmas baskets?
The first thing to be clear about is that Christmas baskets are remuneration in kind, and therefore must be included in the payroll and enter the corresponding payment on IRPF account and in the quote base.
While this should be the case, the reality is that most companies count Christmas baskets as personal expenses, free of withholding and not included in payroll.
As provided for in Article 96 of the LAW on VAT, the fees paid for goods or services intended for customer service, employees or third parties shall not be deductiond in any proportion. And here are the Christmas baskets.
That said, the value added tax quotas supported at the time of the purchase of hospitality services and gifts to employees, customers or suppliers, which are not subject to the usual traffic of the company, are not deductible, and this is specified by the binding consultation of the Directorate-General for Taxes V3818-15.
What VAT do Christmas baskets carry?
Once we are clear that we have to declare the Christmas baskets,now we have the following question: What VAT do the Christmas baskets carry?
The VAT on Christmas baskets will depend on the products you include. In fact, different types of VAT may apply in the same basket.
- VAT over 4% : productssuch as cheeses, eggs or fruits.
- Reduced VAT of 10%: sausages such as ham, loin or chorizo, canned cans, nougats, etc.
- General VAT of 21%: alcoholic beverages.
It is important to declare vat on Christmas baskets correctly,otherwise the Treasury could claim it in the future, along with the corresponding penalty.
> VAT on advertising gifts can be deducted
What could be deducted is VAT from free samples and advertising objects,provided that the amount does not exceed 200 euros per year to the same recipient. In addition, these free samples and advertising objects must bear the company name in a perfectly visible and indivisible way of the delivered object.
This means that if an advertising gift is made that includes the company name, and does not exceed 200 euros per recipient per year, VAT could be deducted. In this case it is important that the invoice issued by the vendor is the document that includes the screen printing.
How do Christmas baskets be taxed on corporation tax?
The expenses of Christmas baskets will be deductible in corporation tax, and so provided for in Article 15 of Law 27/2014 of 27 November on Corporation Tax (LIS), which states that expenses for customer or supplier care, as well as those that are made in accordance with the customs and customs of the company’s staff, shall always be tax deductible with the limit of 1% of the net amount of the turnover per tax period.
In short, Christmas baskets must be declared and their VAT is not deductible,with the exception of advertising gifts or free samples, provided that they have the company name screen-printed and do not exceed 200 euros per recipient per year. What can be deducted is the expense of Christmas baskets in corporation tax, although this will have to be shown to be a custom that the company has been repeating every year.
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