Christmas Gifts: companies and tax authorities
What Christmas is a time for gifts is obvious to everyone, but when the gift is made by a company things change a bit '. The problem of enterprises is not so much what to give, but as the gifts are treated by the IRS.
Typically the gift consists in Christmas baskets, small gifts that bear the name and emblem of your business as in the case of pens, calendars, diaries and the like.
Here is a brief summary of the tax treatment of these gifts.
In this regard it is important to distinguish the VAT treatment from those relating to direct taxes.
We start from VAT.
For VAT purposes must distinguish two different hypotheses:
the company purchases goods that are not part of their own company to make Christmas gifts. It 's the case, for example, a car repair buying panettone to give to employees or calendars to give to customers.
The VAT on the purchase is not deductible.
The free supply of the goods does not apply VAT.
the company offers goods that fall under the actual company. And 'the case of a company that manufactures food of Christmas baskets, with products normally intended for sale, to make gifts for their customers.
The VAT on the purchase of those goods or raw materials needed to produce them is deductible.
The free supply must charge VAT. The company may decide to take on the liability for the tax or, even less frequently, to pay the tax only to those who receive the gift.
Let's move on to direct taxes.
The costs of purchase of gifts are fully deductible if their unit value not exceeding € 25.82.
The rule also applies to goods distributed free bearing emblems, names and other references to distinguish acts as enterprise's products (such as pens, calendars, diaries with your company name).
The limit of € 25.82 must be calculated taking into account also the costs directly attributable incidental expenses (eg transport costs - non-deductible VAT)
In case the homage is constituted by more goods, as happens for example in the event of Christmas baskets, the value should be reported to the well as a whole (in our case to the basket as a whole).
If the gift has a value in excess of EUR 25.82 per unit cost is deductible to the extent of one third of its amount. The deduction allowed to be divided in equal installments in the period in which they were incurred and the following four years.
And if the gift is made from a newly established costs incurred for giveaways, any amount of it, are deductible from the year they are earned its first revenues.
25/11/2005
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Translated via software
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Source:
Italian version of CercaGeometra.it