Taxation of gift cards as rewards in Europe
With the multiplication of incentives programs, gift cards are increasingly used as company rewards. Companies no longer hesitate to mark the different moments of the year with them as they are appreciated by employees, especially since the law encourages this type of action in France, if a certain level is not exceeded.
Regarding Europe, they are not left out. Company life is also boosted by these incentive programs. But does the law give the same possibilities? Let’s take a look.
Are gift cards as work councils rewards taxed in France?
Gift cards offered to employees are not taxed in France if they do not exceed the threshold of €171 per employee per year. This corresponds to 5% of the monthly security ceiling.
What are the events for empoyee rewards?
In order not to pay social security contributions, the employer will also have to distribute rewards to its employees in the context of a given event. URSSAFF (social security agency) provides a list:
- Birth, adoption
- Marriage, civil partnership
- Mother’s Day
- Father’s Day
- St. Catherine’s Day
- St. Nicholas’ Day
- Christmas for employees and children up to the age of 16 in the calendar year
- Start of the school year for employees with children under 26 years old in the year the voucher is rewarded (subject to proof of school attendance)
Example of rewards use
They can distribute this amount in one go at Christmas, for example, or divide it over several events: €100 at Christmas and €71 at the beginning of the school year, for example. The most important thing to avoid paying tax is not to exceed the amount.
Please note that the threshold differs from year to year. In 2016 it was €161 and €250 in 2022.*
*Source: Work councils’ regulation of rewards – URSSAF
Does the UK tax gift cards as employee rewards?
UK offers a threshold for employee benefits that must not be exceeded. The amount is £50 per employee per year in 2020. Discussions have been initiated this year to increase the current ceiling.
A defined framework: trivial benefits
There is no specific event requirement. However, the gift card should not be linked to an employee’s work or performance. Employees should not be contractually obliged to receive and use the reward.
Are employee gift cards taxed in Ireland?
With the “Small Benefit Exemption Scheme” project, Ireland allows companies to offer a one-off reward of €500 per employee per year. It must be a “non-cash bonus” such as a gift card, for example.
A unique reward
The important point is that it can only be given once. An employer cannot give a €400 gift card to an employee and then another €100 in the same year. The second one will be taxable.
Does Germany tax employee gift cards?
Germany provides for a maximum tax-free amount for employee rewards of €44 of non-cash benefits and €69 of gift cards per month.
The €60 must be for a personal event in the employee’s life that is not work related. For example, it can be for a birthday, the birth of a child, etc.
These authorised and tax-free rewards are reviewed monthly and are not cumulative. This means that if an employee does not receive anything one month, the company will not be able to give him or her what he or she did not receive the previous month.
Does Austria provide a tax-free amount for employee rewards?
Regarding corporate events and employee gifts from a wider perspective, the maximum amount that can be claimed as tax-free is €365 per year per employee. Only €186 per year is allowed for individual gifts, including gift cards.
Does Poland exempt employees rewards?
A maximum tax-free budget of PLN 1,000 – about €227 – is set for employee benefits. However, for the time being, vouchers and gift cards are excluded from this regulation but discussions are open to change it.
What about Spain, Switzerland and Portugal?
Today, even if the gift card is a reward used in the companies’ incentive programs in those countries, no regulation has been put in place to date.