Business gifts and tax: the 80% rule and the € 227 VAT limit
Written by Ilias Aarrass6 min read · Last reviewed on 
Written by Ilias Aarrass6 min read · Last reviewed on A Christmas box for your regular client, a book for the contact who landed you a great project: business gifts are part of doing business. Tax-wise there are two catches. For income tax, gifts fall under the partially deductible mixed costs, like business dinners. And for VAT a separate scheme applies, the BUA, with a limit of 227 euros per recipient per year. Knowing both rules lets you be generous without surprises.
Income tax: 80% deductible or the threshold
Business gifts are mixed costs: business-driven, with a private element. Each year you choose between two methods: deduct 80% of all mixed costs, or deduct everything above a fixed threshold of 5,700 euros (2026). For nearly every freelancer the 80% method wins; the threshold only pays at tens of thousands in entertainment costs. The same choice covers business dinners and conferences, see dining with your client. In a bv the percentage is 73.5%.
VAT: the BUA and the € 227 per relation limit
For VAT the input tax exclusion decree, BUA, applies. In essence: VAT on gifts is not deductible if the recipient could not have deducted that VAT themselves, think consumers or exempt businesses, and you spend more than 227 euros excluding VAT on that one recipient in a year. Stay under that limit per relation and you simply deduct the VAT. Exceed it and the deduction lapses for the whole of the benefits to that relation, not just the excess.
If you give to a VAT-registered business that could deduct the VAT itself, the BUA does not apply and your deduction stands, regardless of the amount.
Gifts to staff run through the work costs scheme
Gifts to your own staff, like a Christmas box or birthday present, fall under payroll tax rather than the BUA story above. Through the free margin of the work costs scheme you can give such gifts tax-free while the margin lasts. For VAT, the 227 euro per employee per year limit then does apply, together with other staff provisions.
What it means in practice
A typical gifting round stays quite manageable for tax:
Worked example: a € 40 box for 30 clients
- Total cost excluding VAT
- € 1,200
- Deductible for income tax (80%)
- € 960
- Spent per recipient
- € 40, well below € 227
- VAT on the boxes
- fully deductible
Result: At roughly 37% tax the € 960 deduction yields about € 355 in tax benefit, and the VAT comes back in full
Keeping it tidy in your records
A few habits prevent discussion afterwards:
- Keep the invoice and briefly note the business occasion and the recipient, certainly above 50 euros apiece.
- Book gifts on a separate cost account, apart from advertising; that keeps the 80% calculation at filing time simple.
- If one relation receives several gifts in a year, add the amounts and check the € 227 limit before December.
- Cheap promotional items with your logo, like pens or notepads, are simply advertising: fully deductible, not mixed costs.
Frequently asked questions
Is a gift voucher for a client also a business gift?
Yes, treat a voucher the same as a physical gift: 80% deductible as mixed costs and counting towards that relation's € 227 limit. Giving cash to a client is unusual and can raise questions; prefer a voucher or a tangible gift.
Does my client owe tax on a gift?
Not for customary tokens. Only structural or sizeable benefits could count as income or a taxable gift for the recipient, and a normal business gift sits well below that.
Do tokens for an opening or anniversary fall under these rules?
Yes. Anything given to a business relation without direct consideration counts as a gift: flowers at an opening, a book at a farewell, a thank-you after a referral. Same 80% deduction, same VAT limit.
Is sponsorship the same as a business gift?
No. True sponsorship involves consideration, such as your logo on a shirt or website mention. That makes it ordinary, fully deductible advertising with deductible VAT. Without consideration it is a donation, with different rules.
What about a present for myself or my family?
That is private and thus not a business cost, however festive the occasion. If paid from the business account, book it as a private withdrawal. See also which costs are deductible.
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.
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