VAT when giving things away, promotions and giveaways
Written by Ilias Aarrass6 min read · Published on · Last reviewed on 
In short
If you give away goods from your business, that is a deemed supply for VAT and you remit VAT on the purchase price or cost, except for promotional items and samples up to € 15 excluding VAT and for gifts that stay below the annual threshold per relation.
- If you deducted no VAT on purchase, for example with margin-scheme goods, you remit nothing when giving it away either.
- Free hours or a free service generate no VAT, because no goods leave your business.
- With buy-one-get-one or a discount you charge VAT on what the customer actually pays, with the discount visible on the invoice.
- Writing off unsaleable or damaged stock is not a supply: no VAT, and the loss is ordinarily deductible.
A free sample pack with a first order, a prize in a social media giveaway, a box from your stock to charity: entrepreneurs regularly give things away. For income tax that is usually simple, because these are ordinary advertising costs. For VAT it is not, because VAT assumes you deducted the input tax in order to generate turnover with it. If you do not, VAT wants that deduction back. This article explains when you owe VAT on something you give away, which thresholds exist and how to invoice discount promotions correctly.
Giving something away is a supply to yourself
If you take a product from your stock to give away, VAT treats that as a supply for which you receive no payment. You then remit VAT on the purchase price or cost of that product, not on your selling price. That prevents you deducting input tax on goods that ultimately generate no taxable turnover. If you deducted no VAT on purchase, for example because you bought from a private individual or under the margin scheme, you remit nothing when giving it away either.
For services it works differently. If you perform a service free for a client, for example an hour of input without an invoice, no VAT is due. There is no payment and no goods leaving your business. Only if you perform that service for yourself or for private purposes may a correction be needed.
| What are you giving away? | Remit VAT? | On what |
|---|---|---|
| A product from your stock to a client | yes, unless below the threshold | the purchase price or cost |
| Promotional item or sample under € 15 excluding VAT | no | excluded, the deduction stands |
| Business gifts above the annual limit per relation | yes, through a correction | the VAT deducted that year |
| A free service or free hours | no | no supply of goods |
| A prize in a giveaway | yes, if you deducted the VAT on purchase | the purchase price of the prize |
The thresholds for business gifts and promotional items
Not every item given away leads to a remittance. There is a threshold per relation per year for gifts and staff benefits: stay below it and you may simply deduct the VAT without correcting anything. Go above it and you correct the VAT you deducted for that relation that year. You make the correction in the final return of the year. The income tax deduction is separate; those rules are in business gifts and deductibility.
There is also a practical exception for promotional items and samples worth up to € 15 excluding VAT each: pens with your logo, stickers, a sample sachet. These stay outside the correction, even if you hand out hundreds. Book such costs to a separate advertising account, so that in an audit you can immediately show you stayed below the limit.
Discount promotions: VAT on what you actually receive
With promotions such as buy-one-get-one, 50 per cent off or a welcome discount, nothing is given away. You supply two products for one price, and you calculate VAT on the amount you actually receive. Show the discount on your invoice and calculate VAT on the amount after discount. That keeps the invoice verifiable and your turnover consistent with your VAT return.
Watch out with mixed rates: if you give a 9 per cent product free with a 21 per cent product, you must split the payment received across both rates. If you work with vouchers or gift cards, a separate set of rules applies to when the VAT becomes due; those are in discounts, vouchers and VAT.
A giveaway using a product from your stock
- Prize
- a product with a purchase price of € 80 excluding VAT
- VAT on purchase
- € 16.80, deducted earlier
- Giving it away
- deemed supply, VAT on € 80
- To remit
- € 16.80 in that quarter's return
- Income tax
- the € 80 remains deductible as advertising costs
Result: The promotion costs you € 80 net, because the VAT goes out and comes back. If your gifts to one relation stay below the threshold, you need not correct the VAT.
Donating, sponsoring and writing down stock
If you give goods to charity, the same deemed supply applies: VAT on the purchase price, unless you never deducted that VAT. For income tax such a gift is not an ordinary business cost but falls under the gift deduction, unless something is given in return. If there is something in return, for example your logo on a shirt or a mention in a programme, it is sponsorship and ordinarily deductible; see sponsorship and advertising costs.
If it is not about giving away but about unsaleable stock, for example damaged or expired items, there is no supply and therefore no VAT. You write the stock down and that loss is ordinarily deductible. Do record what was written off and why, with a date and quantities; see valuing stock at year-end.
Frequently asked questions
Do I owe VAT on something I give away free?
For goods from your business usually yes, on the purchase price or cost, because it is a supply to yourself. Promotional items and samples up to € 15 excluding VAT, and gifts below the annual limit per relation, are excluded.
How does buy-one-get-one work for VAT?
You charge VAT on the amount the customer actually pays. There is no deemed supply, because the second product is included in the price. Do show the discount on the invoice.
Can I deduct the costs of a giveaway?
Yes, as advertising costs for income tax, because the promotion serves your turnover. The VAT correction is separate and follows the rules on giving things away.
And if I do something for free instead of giving something away?
Free hours or a free service generate no VAT, because there is no payment and no goods leaving your business. If you do invoice those hours later, it is ordinary turnover.
Sources
- Threshold for staff benefits, gifts and business giftsBelastingdienst · belastingdienst.nl
- Subsidies, damages and voluntary contributionsBelastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
