Gift cards for employees: cost for the company or investment in its competitiveness on the market?

The quick answer is: both. Technically and in terms of accounting, gift cards are a cost to an enterprise, while from a modern and wise human resources perspective, gift cards are an investment in the future of our company.

Gift cards are one of many direct instruments of modern incentive policy for companies, taking care of employee well-being, employee motivation and attitude to the workplace, while indirectly affecting the competitiveness of companies on the labor market and their image as an employer.

This criterion has become equally important with others, because of the so-called employee market development – once employment was associated with employee submission to the company and unequal relations, while nowadays in healthy and mature organizations there should be a balance in mutual relationship: the company employs an employee because it values his competences, skills and personality, while the employee decides to choose a given company because, apart from competitive remuneration, it also values the employer’s reputation, work environment, atmosphere and people. An important element complementing the whole are non-wage benefits offered to employees, such as gift cards for well-known brands.

Gift cards are usually bought by enterprises as comprehensive packages, so-called cafeteria systems – remuneration systems that allow employees to choose from a range of benefits offered within a certain financial limit. An example of a cafeteria offer: tickets to the gym, swimming pool, fitness, prepaid cards, tickets for sporting and cultural events or just gift cards and vouchers for stores of known chains and brands.

In order to motivate companies to use this solution and its popularization and to facilitate financial settlements, the fiscal system of many countries, including Poland, has provided tax and social security (ZUS) incentives related to the use of this solution. Specific categories and type of gift cards aimed at employee development can be even exempted from taxation. In Poland, this limit amounts to PLN 1000 per employee per year and is regulated by the company social benefits system (ZFŚŚ).

There are many employee benefit agencies on the market (B2B channel) which, apart from an attractive substantive offer (interesting brands in portfolio) also offer comprehensive support in the settlement of gift card costs – they know which cards fall within the scope of benefits covered by the social benefits fund, how to qualify them as costs and bill them.

Amilon also offers a wide range of gift cards in its portfolio – around 200 partner brands around the world – which are used to reward and motivate employees. Gift cards are available in various denominations and conditions of use. We help in choosing them for your company and employees. We remain at your disposal for the contact and consultancy.

Article written by Karol Ziółkowski, Business Development Manager Poland @ Amilon Warsaw

Are gift cards for employees Tax-Free?

An investment to succeed

Employees wellness has become in the recent years a top priority for companies on both a country-specific and global level.

HR departments are investing a lot in talent acquisition, development, and retention: humans are no more resources, they are now investments to succeed.

New wordings have quickly spread inside HR offices: employee recognition, employee benefits, bonus for employees …

These are all replies to the same fundamental question: how can companies show their employees how much they care of them?

A highly appreciated way to do that is lying in corporate gift cards for employees. Companies allocate yearly budgets, that employees can spend as they wish among all the available options included in the employee recognition gift card program. This form of recognition as become really popular because of its broad appreciation from employees. In fact, they have the total freedom of choice in selecting their preferred gift cards, according to their own preferences, tastes, interest, and needs.

Clearly, gift cards bring many advantages to employees who are really satisfied with their reward. But what about companies? What are the advantages for companies?

Tax treatment of gift cards in Europe

This is the big question companies always ask: “are gift cards for employees tax-deductible?”

As it frequently happens, answers are different depending on the European country considered.

But let’s get deeper:

Taxation of Gift Cards in Germany

Germany allows a discreet range of deduction on gift cards for employees. According to the Income Tax Act, non-cash benefits to employees up to 44 euros per month remain tax-free, as well as gifts up to 60 euros that are exempt from social security contributions.

In addition to the monthly amount of 44 euros, non-cash benefits of up to 60 euros remain tax-free if they are given to employees in the occasion of personal events. Where, “personal event” stands for birthdays, employees’ children births’ anniversary, etc. The bouquet of flowers as a welcome greeting after a prolonged illness also falls under this category.

Taxation of Gift Cards in France

France admits tax deduction on gift card as corporate bonus, provided they do not exceed the yearly amount of € 171 per employee in 2020 (5% of the monthly Social Security ceiling).

Moreover, as we have seen for Germany, personal events play an important role in France too. In fact, employers can increase the non-taxable amount of non-cash bonuses given to their employees on personal occasions to celebrate. Marriage, retirement, birthday, beginning of the school year, Christmas, etc. are all events when French companies can reward their employees and sales force with gift cards and vouchers that are relevant for the celebrated occasion.

Taxation of Gift Cards in the United Kingdom

Compared to the other countries in Europe, the United Kingdom allows a stricter tax-deduction policy on gift cards given to employees. In fact, only up to 50£ gift cards are tax-free for companies in UK, whereas exceeding amounts are completely taxed.

Another common rule on corporate gifts in UK, is that non-taxable gifts need to be categorized as “trivial benefits”, namely they need to be non-performance-based and there cannot be a contractual obligation to get and enjoy the gift.

Taxation of Gift Cards in Austria

Austria has a broader policy about gifts and expense accounts that includes both corporate events for employees and individual corporate benefits.

Benefits from attending company events reach €365 per year (company excursions, cultural events, company festivities, etc.) and gifts and rewards received in such contexts amount to a maximum of € 186 per year. Austrian broader non-taxable treatment of gifts includes Christmas presents, gift vouchers or gold coins that are exempt from tax incomes.

Taxation of Gift Cards in Poland

Poland yearly allocates a yearly budget in order to support companies in the corporate benefit distribution. Every year, the Company’s Social Fund, provides for a maximum of 1000 PLN per employee that is tax-free and that companies can spend in incentive and reward programs.

For now, in Poland vouchers and gift cards are left out from this tax-free policy that rules incomes on incentives and rewards, although there is great attention to this argument that may change in the very next future.

Taxation of Gift Cards in Spain, Portugal and Switzerland

Companies in Spain, Portugal and Switzerland often choose gift cards and vouchers as corporate benefit and gifts, because of their extreme flexibility and appreciation by employees. However, there are no specific regulations yet on gift cards and gift vouchers.

Choose Your Gift Card Partner

To conclude, clearly there is a real convenience in choosing gift vouchers and gift cards for companies that are looking for successful ways of incentivizing their sales force. If you are a company in Europe looking for a partner, Amilon is the best option for you to make your employee benefit gift card program a reality. In no time you will get your employees satisfaction and recognition with our global assortment of more than 200 digital gift cards enjoying the tax-free policy that is enforced almost all over Europe.

Article written by Giuseppe Di Rienzo, International Sales Manager at Amilon