Who is affected by the taxation of corporate gifts?

The taxation of giveaways Corporate governance is a complex subject that requires taking into account the three key players involved in this process: the “Third Party” company, the Employer and the Salaried Employee.

Each of these players has a distinct role in the gift chain and the taxation that applies varies according to their position.

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The company “Thirds”

The company “Tiers” is the entity that offers the gift or voucher to the external collaborator. When she gives a gift to an employee in another organization, she may face tax obligations. In general, these expenses are considered operating expenses, which means that they are deductible from the turnover of the “Third Party” company. However, it should be noted that limits may apply in terms of tax deductions.

It is essential that the company “Third Parties” complies with the rules in force to avoid any problems with the tax administration.

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The employer

The employer is directly linked to the working relationship with the employee. When an employer gives an employee a gift or voucher, it can be considered a benefit in kind. According to the tax legislation of many countries, these benefits in kind are subject to employee income tax. However, there are often tax thresholds or exemptions for low-value rewards.

Employers should comply with local rules and properly inform their employees about any benefits in kind, including gifts, in order to ensure fiscal transparency.

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The paid collaborator

The employee is the final recipient of the corporate gift. For his part, it is important to understand that receiving gifts or vouchers can have tax implications. In most cases, benefits received as an employee, including those present, are subject to income tax. However, legislation may provide exemption thresholds for low-value rewards, which means that not all benefits are necessarily taxable.

Employees should be aware of their tax obligations and, where appropriate, declare the benefits in kind received to their tax authorities.

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Taxation of corporate gifts: What you need to know

Whether you are an employer, an employee or a “Third-Party” company, discover the current principles on the taxation of corporate gifts.

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As an employer and salaried employees

When giving gifts and vouchers to your employees, it is essential to understand the tax implications that flow from them. These benefits are considered as a form of remuneration by URSSAF, which means that they are subject to social security contributions in accordance with common law. As an employer, you are responsible for paying social security contributions and for showing these bonuses on your employees' pay slips. For their part, employed employees must declare these benefits in accordance with the regulations in force.

There are situations where tax exemptions apply, in particular for rewards and vouchers in connection with specific events. These eligible events include:

• birth or adoption;
• Marriage or PACS;
• Retirement;
• Mother's and Father's Day;
• Sainte-Catherine and Saint-Nicolas;
• Christmas, both for employees and children up to the age of 16 in the calendar year;
• The start of school for employees with children under 26 in the year in which the voucher was awarded (subject to the justification of the school attendance).

When it comes to eligible events, URSSAF specifies that the distribution is managed by the Social and Economic Committee (CSE). However, if the company does not have a CSE or if it has between 11 and 49 employees (with so-called “reduced” allocations for the CSE), the employer is responsible for the distribution. In the event of absence of the CSE, attested by a deficiency report, the employer resumes the distribution.

Gifts and vouchers offered to employees by the employer are generally subject to social security contributions. However, an exemption is possible when the total sum of all vouchers and gifts awarded to an employee during a calendar year does not exceed €193, i.e. 5% of the monthly Social Security ceiling.

In this case, each euro donated does not generate any contributions, which is beneficial for your business. However, it is essential to respect these conditions. In the event of non-compliance, companies that pay gift certificates to their employees must declare the amounts on the pay slips and pay the corresponding social security contributions.

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As a “Third-Party” company and employed collaborators

When the beneficiaries are self-employed, they are required to report these benefits themselves in their income. However, for other employees, gifts and benefits in kind by a person who is not an employer in return for an activity carried out in the interests of this person are considered as remuneration.

If the beneficiaries work in sectors such as the sale of cosmetic products, distribution, distribution, hotels, banking and insurance services in direct contact with customers, or other similar areas, specific rules apply. In these cases, a lump-sum discharge contribution is generally applicable.

However, this contribution does not apply if the employer and the third company have agreed to avoid the payment of contributions or if the third company belongs to the same group as the employer. In the latter case, contributions are due in accordance with the rules of common law.

The statements vary according to the sum of the benefits offered. You have two options for reporting your transactions, depending on the amount of the bonus:

Option 1: the annual declaration (1 transaction)

• Band 3: Amount greater than 150% of the SMIC - application of the common law regime.
• Tranche 2: Amount between 15 and 150% - discharge contribution (20%).
• Band 1: Amount less than 15% of the SMIC - no contribution.

Option 2: reporting per transaction (4 per year)

• Band 3: Amount greater than 70% of the SMIC - application of the common law regime.
• Tranche 2: Amount between 10 and 70% - discharge contribution (20%).
• Tranche 1: Amount less than 10% of the SMIC - no contribution.

If the business sector does not belong to those mentioned above, the Common law regime applies. In this case, you must pay 30% to 35% of contributions and contributions.

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Taxation on business gifts

When rewards are given, whether to customers, suppliers, or employees, it is essential to understand the tax implications that come with them.

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Tax deductibility

Business gifts are considered to be expenses deductible from business results, provided that they are donated in the interests of the company itself. This means that if these gifts are used to promote the business, maintain good business relationships, or achieve other goals related to business activity, their cost can be subtracted from taxable profits.

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VAT recovery

It is possible to recover the VAT paid on business gifts if the value of these rewards does not exceed €73 including VAT per beneficiary. Above this threshold, VAT cannot be recovered. It is therefore crucial to carefully monitor the value of the gifts you are giving to each recipient.

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Adequacy to the size of the company

It is important that The value of business gifts is proportionate to the size of the business. This means that the rewards should not be excessively lavish compared to the company's resources. A small business should not offer excessively expensive gifts, which could be frowned upon from a tax perspective.

The management of business gifts depends on the total amount offered during the fiscal year of your business:

• If the total amount of business gifts exceeds €3,000, you must indicate this amount on the overhead statement. This statement is essential to remain in compliance with tax and accounting obligations.
• If the total sum of business gifts is less than €3,000 during the fiscal year, no declaration is necessary, although keeping a record of these gifts is always recommended for accounting purposes.

If you need, if you have concerns, or if you are looking for additional advice on the tax management of business gifts, we recommend that you turn to our partner. Avocado, a law firm specializing in social and fiscal advice related to grants for winners of commercial challenges. They will be at your disposal to guide you in complying with tax rules and help you optimize your assets while remaining in compliance with the law.

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