Christmas gifts for employees and business associates

With the start of the Advent season, many companies shift their attention to the annual gift-giving period. Whether small gestures for business partners or seasonal appreciation for employees, the volume of benefits typically increases significantly toward year-end. At the same time, tax audits are becoming more sensitive in this area. A clean and audit-proof implementation is therefore essential.

A fundamental principle: The tax treatment depends on whether the gift is provided to business partners or to employees. In both cases, the gift must be granted “without consideration” – meaning the recipient must not be obligated to return the gesture through any action or service. Only then is it treated as a gift within the meaning of tax regulations.

Gifts to business partners – tax-compliant and deductible handling

For benefits provided to customers or business partners, the following rules apply:

Tax deductibility

• 50-euro limit per recipient per year: Expenses up to this amount are deductible as business expenses.

• Observe aggregation: Several gifts to the same recipient must be aggregated over the calendar year.

• Exceeding the limit: If the 50-euro limit is exceeded, the full amount becomes non-deductible.

Taxation at recipient level

The recipient must generally declare the value as taxable business income. Companies may cover this burden through flat-rate taxation according to Section 37b of the German Income Tax Act (EStG).

Documentation – audit-proof requirement

• Invoices and receipts
• Clear identification of the recipient
• Occasion and purpose of the gift
• Reference to voluntary nature (“without obligation and without consideration”)

Gifts to employees – tax-free and taxable options

For gifts provided to employees, fixed tax rules apply:

50-euro tax-free threshold per month

• Non-cash gifts up to 50 euros per month remain tax-free, provided no contractual obligation exists.

• If the threshold is exceeded, the entire amount becomes taxable wages.

Flat-rate taxation

The employer may also cover the taxable portion through flat-rate taxation under Section 37b EStG.

Special personal occasions

Up to 60 euros per event (birthday, wedding, birth of a child) remain tax-favoured – again under the condition of voluntariness.

Documentation

• Invoices and receipts
• Occasion and value
• Clear indication of voluntary nature

Our recommendations for a compliant Christmas season

• Manage thresholds strictly: Clear internal guidelines help prevent unintended tax burdens.
• Communicate the voluntary nature clearly: Avoid establishing any entitlement claims.
• Take documentation obligations seriously: Complete audit trails reduce inquiries during tax audits.
• Consult professionals early in case of doubt: Expert advice ensures legal certainty.

If you need support in handling your year-end gifts or want to optimise processes for 2026, we are happy to assist with clear recommendations and reliable tax expertise.