Employers can organise company Christmas parties tax-free for employees working from home

Tax Administration Bulletin, 11/2/2020

The coronavirus affects company Christmas parties and other celebrations. Recently, the Tax Administration has received many enquiries about the income-tax consequences of Christmas parties and other celebrations when the participants use an online remote connection. Employers can organise Christmas parties and other activities tax-free both in traditional office settings and as a virtual event.

Employers are entitled to offer entertainment, food and drinks for virtual guests

It is tax-free for employers to have food and drinks delivered to the employees’ homes or to places where employees can collect the food and drinks.

However, if the employer distributes gift cards for buying the food and the drinks, it is treated as additional wages subject to tax.

Employers are entitled to present a small gift

Employers can send small gifts to their employees. For example, someone working from home can receive a Christmas present from the employer with no tax consequences. However, the gifts are tax-free only if they are distributed to everyone on the payroll.

In addition, the total value of the gifts must not exceed €100 per year. Examples of acceptable gifts from an employer include an employer-selected memento, an entrance ticket to an event, a service or a gift card for a specific purpose. This means a gift card that allows for a specific service or gift item to be purchased in a specific place. 

Another possibility is a list drawn up by the employer of the gift items that staff members can receive. Everyone can then select a preferred gift from the list.

Any gifts offered by the employer in cash, or in any form similar to cash, are treated as additional wages subject to tax.  In the same way, if the total value of the gifts exceeds €100, it is treated as additional wages subject to tax.

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