End-of-year gift for your staff

Does every employer give an end-of-year gift?

Almost 60% of SMEs give an end-of-year gift to their staff every year. A small proportion (6%) sometimes give a Christmas gift, but not every year. Over a third (36%) do not give an end-of-year gift, according to KVK research among 433 entrepreneurs with staff (2023).

Is a Christmas gift mandatory?

No, as an employer you are not required to give your staff a Christmas gift. It is a token of appreciation and a way of building staff loyalty. You do not have to include a Christmas gift in your terms of employment. But if you have included it in your terms of employment, then you should honour that promise. Read more about terms of employment.

What is the normal amount for a gift?

According to the KVK survey, entrepreneurs pay an average of €102 for end-of-year gifts per employee. The values varied from €10 to €1,250 per employee, but almost half give an amount between €50 and €100.

Is a Christmas gift tax-free?

VAT: Is the VAT paid on a Christmas gift deductible?

Yes, if the value of your gifts per employee is less than €227.

For the Tax Administration, a Christmas gift falls under 'employee benefits, gifts, and business gifts'. You calculate the expenses for staff facilities, such as a gym, in proportion per employee. For example, if it costs €500 and you have 10 employees, you allocate €50 to each employee. You must keep the value of gifts and business gifts per employee.

Is the value of your gifts per employee less than €227? Then you may deduct the VAT paid on the donation to that employee. Check the purchase invoice for the VAT paid. Read more about the threshold amount for employee benefits, gifts, and business gifts (in Dutch).

Payroll tax and the work-related costs scheme: What about payroll tax on a Christmas gift?

In principle, everything you pay or give to your employees is salary over which you deduct payroll tax. The work-related costs scheme (WKR) states the exceptions. One of these is the ‘discretionary scope’. You can use this to give your employees something untaxed. For example, a Christmas gift, birthday present, or gift voucher.

Under the work-related costs scheme, you calculate the discretionary scope from the sum of the wages you have paid (your total wage bill). You use the taxable wage for this purpose. The taxable wage is the gross wage plus the healthcare insurance contribution. The discretionary scope is 3% of the first €400,000 of your total wage bill. Is your total wage bill higher than €400,000? Then you calculate 1.18% for the amount above that. Add up the amounts and you have your discretionary scope. As an employer, you do not pay payroll tax on your gifts within the discretionary scope. For your employee, it is also untaxed for income tax purposes.

Is the value of your gifts higher than the amount in your discretionary scope? Then as an employer, you pay 80% tax on the amount above the discretionary scope. This is called the final levy.

Are sustainable Christmas hampers a trend?

The KVK survey also showed that a quarter of all employers who give an end-of-year gift consider sustainability important. “Giving non-sustainable products that are then not even used no longer fits with these times,” explained one entrepreneur.

“There is increasing demand for a responsible Christmas gift,” says Eveline Bakker of family-owned Stegman Gifts. “For instance, plastic-free products made from hemp or recycled textiles. Or products made in a sustainable way, or which last longer.” 

In addition to a sustainable product, you can also think about gifting an outing or experience. And you can pay attention to buying from a local entrepreneur. Finally, you can also offer employees the opportunity to donate to a charity of their choice. This could be an amount of money or a donation of a Christmas hamper to someone living below the poverty line. Read more about organising a charity event.