Tax and Christmas presents - Do you know the rules?
Christmas is just around the corner, and with it comes the planning of company Christmas gifts and efforts to boost workplace wellbeing. But what tax and VAT rules actually apply to festive gestures like Christmas presents, gift vouchers, and Christmas parties? In this blog post, we provide a clear overview of what you, as an employer, can give – without it triggering tax implications for either you or your employees.
Rules for Christmas Gifts
As an employer, you’re entitled to deduct the cost of (Christmas) gifts to employees. In 2025, an employee can receive gifts and minor staff perks worth up to DKK 1,400 including VAT without being taxed. The Christmas gift counts towards this limit. However, Christmas gifts worth up to DKK 1,000 including VAT are always tax-free – even if the total value for the year exceeds DKK 1,400.
This means you can give a Christmas gift worth up to DKK 1,000 tax-free, regardless of any other gifts given throughout the year. If the gift exceeds DKK 1,000, or if the total annual value goes over the threshold, the employee must pay tax on the entire amount.
Example:
If you give an employee a Christmas gift worth DKK 900 and other staff perks worth DKK 600, only the DKK 600 is taxable. But if the Christmas gift is worth DKK 1,100, the full amount becomes taxable.
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Reporting of Christmas presents
- The employee must declare the total amount in box 20 of their annual tax return if the value exceeds DKK 1,400 in 2025 to Skat (the Danish tax authority)
- The employer is required to report the gifts given and may deduct the full cost as a business expense, regardless of the annual threshold. However, VAT on gifts to employees is not deductible.
Gift cards and cash
Cash is always taxable, as it is treated as salary. Gift vouchers may also be taxable unless they meet specific criteria – for example, a voucher for a particular item or a specific restaurant pre-selected by the employer. Electronic gift cards or those that can be used widely are considered equivalent to cash and are therefore taxable.
Do you give customers gifts too?
If you also choose to let your customers feel the festive spirit by treating them to gifts, the rules depend on the nature of the gifts.
If the gift is considered a promotional item, it is fully deductible for both tax and VAT purposes. However, if it qualifies as representation, no part of the VAT is deductible, and only 25% of the total cost including VAT can be deducted for tax purposes.
Whether a gift counts as promotional or as representation depends partly on the cost price and partly on the type of gift. If the Christmas gift cannot be eaten or drunk, and costs no more than DKK 100 excluding VAT, it will be considered a promotional gift – provided the items are branded with a logo and/or company name and are produced in larger quantities for promotional purposes. Examples include pens, calendars, and similar items.
If you choose to give your customers gifts such as wine, beer, spirits, chocolate, or similar, the gift will not be considered a promotional item for tax or VAT purposes unless it is given to all your customers or to an unspecified group of customers or potential customers. This applies even if the DKK 100 limit excluding VAT is not exceeded and the gift bears the company name and/or logo.
Tax rules and Christmas parties
When hosting a Christmas party for your employees, the company can generally deduct all related expenses for tax purposes. This includes everything from venue hire, food and drink, to entertainment and transport – even when it’s customary for spouses to attend.
Whether VAT can be reclaimed depends on the location of the party. If it’s held on company premises, such as in the staff canteen, VAT on the associated costs is not recoverable. However, you can fully reclaim VAT on items like hired chairs and tables – though not on catering.
If the party takes place at an external venue, such as a restaurant, the company can reclaim 25% of the VAT on the total cost per guest.
Do you need help?
If you need assistance or advice on tax matters, feel free to get in touch with us. We offer guidance across all areas of personal and corporate taxation.
