Employee Gifts - What to Consider

Christmas is just around the corner and the holiday business is in full swing. Gifts are not only bought for family and friends, but employees should also be rewarded for their great work. However, what are the tax implications of these small gifts? We will clarify:

Employee Gifts

Whether it's a Christmas, long-service, or birthday gift, two questions often arise: Can the input tax be deducted and does the gift have to be declared as salary?

For so-called in-kind gifts to employees, the value per event is decisive. Gifts under CHF 500.-/year do not constitute a taxable performance and are therefore not subject to VAT. These benefits also do not need to be declared in the salary certificate.

Gifts over CHF 500.-/year must be listed in the salary certificate under number 2.3 and are therefore also subject to VAT. Relevant for determining this threshold is the market value of the gifted item.

Monetary benefits or the like are not taxable benefits. They are handled just like salary payments. They must always be declared in the salary certificate and are not subject to VAT.

When can the input tax be deducted?

In principle, employers can deduct the paid input tax when entrepreneurial activities have been carried out. This is usually the case with employee gifts.

However, it depends on whether a company provides taxable services. If a company provides exclusively taxable services, it can deduct the full input tax. If the company provides services that are exempt from VAT, no input tax can be deducted. For companies that provide both services, the input tax deduction can be claimed with direct allocation.