What is the tax applied to customer gifts?

Arafathoss

What is a business gift? Business gifts can be office accessories, high tech, a t-shirt, a shirt, etc. The cost must be reasonable and these accessories must be used for professional purposes. Most of these gifts are made with the company logo and are offered to suppliers and customers to support the business relationship. The business gift is offered as part of professional exchanges, it is an important tool in a company's marketing strategy. Thus, these offerings are an aid to creating and sustaining your business relationships . They improve the loyalty of your customers and can, if necessary, be a reward for your ambassadors. Business gifts have a certain interest in promoting a product, a service or the company. Also, these allow you to stay anchored in the minds of your customers.

They are a real advertising strategy and give you the opportunity to please and make you visible. Indeed, by offering a sports bag with your image to a member and they carry it, this informs those aroundTelemarketing Data List you of your existence. How to manage VAT for customer gifts? VAT is not recoverable in principle for customer gifts, however, the gesture makes sense and has a positive impact on the commercial relationship between suppliers and customers. However, there is an exception for low value gifts. Thus, it is possible to recover VAT only when the unit purchase cost of the item does not exceed 73 euros including tax per year and per beneficiary. This amount is set by the public authorities, but it is reassessed regularly. This was revised on January 1, 2021 . Thus, for a gift costing 73 euros, you can recover 14.40 euros in VAT deduction, with VAT at 20% for customer gifts. Please note that the tax administration also includes the costs of the gift, such as postage, packaging costs, etc. in the ceiling of 73 euros. Therefore, you will have to plan a gift of 50 euros, and with around 23 euros in costs, it will reach 73 euros. Furthermore, if you want to please your customers, nothing is stopping you, but you will have to anticipate the fact that the VAT paid from 73 euros will not be recoverable.



As a result, a gift for 100 euros including tax, all inclusive, will cost you 85.60 euros, and a gift for 50 euros including tax, all inclusive, will ultimately cost you 40 euros. How are business gifts taxed? Taxation of business gifts depends on the price of the gifts in question. Please note that if the total amount of your corporate gift purchases does not exceed 3,000 euros, you will not have to declare anything, however, if you exceed this threshold, you will have to declare these amounts on your general expenses statement. In fact, companies can deduct the amount allocated for business gifts from their taxes intended for their customers, suppliers or employees . On the other hand, apart from exceeding the amount, certain rules will also have to be respected. Indeed,the budget and unit value of gifts must be consistent with the company's turnover and the business relationship. That is, a small gift for a small client, a larger gift for a larger client. Your spending needs to make sense! Then, the gifts chosen and offered must be in the interest of the proper functioning of your business. It is prohibited to give yourself a gift and transfer it to the company account. Please note that the tax administration will be very precise on this subject to avoid any risk of fraud . The present must be linked to the commercial activity and make sense. Finally, a gift should not be given in order to purchase favors from a customer or supplier, otherwise it may appear as bribery.