Hohoho! Ready for Christmas, but what about company gifts and Christmas dinners?

Christmas is approaching and many employers are starting to think about company Christmas gifts for employees and who to invite for Christmas dinners. The rules around this can be difficult to interpret but we will help you sort out the different possibilities for companies in Sweden.

Christmas gifts for employees

• The value of the gift may not exceed SEK 500 including VAT to be considered tax-free. The employer may, of course, give more expensive gifts, but then the gift is seen as salary and becomes taxable for the employee from the first krona. The gift may not be given in cash.
• The employee can choose to donate money to a non-profit organization instead of receiving a Christmas gift from the employer, but then the employee must be taxed for the value of the gift  equivalent as for salary.
• If instead the employer decides to donate to organizations, instead of giving a Christmas gift, the employee is not affected.

Christmas gifts for customers

• Are not deductible but deductions are allowed for simpler advertising gifts of insignificant value. The gifts must have a direct connection to the company's business or be simpler gift items. Usually, these are some forms of promotional gifts with the company logo on it.

Christmas dinner for employees

Christmas dinner and Christmas parties are in Sweden considered an internal representation and are in that case tax-free for the employees (no benefit taxation). The rules regarding representation states that the company may make deductions only for simple food and drink consumption to a value of no more than SEK 60 excluding VAT per person and occasion. In addition to this, no deductions are allowed and therefore the company may not make deductions for food and drinks. A deduction of a maximum of SEK 180 excluding VAT per person and occasion is allowed for incidental costs such as rental of venue, musical entertainment and the like. Costs in connection with staff parties are deductible for a maximum of two occasions per year. If employees' family members are invited to the Christmas party, the company may make a deduction for them as well. If the conditions are right, costs for travel and accommodation (one night only) in connection with a Christmas party in another location are also deductible.

Excessively lavish Christmas parties that can be considered a luxury representation are not deductible for the company and may be taxed as a benefit to the employees. In that case, the entire cost will be deductible as a payroll cost, but the company must at the same time pay employer contributions on the value of the benefit. It is impossible to say where the limit for luxury is, which is why it is good to keep the Christmas table/Christmas party at a reasonable level.

It is worth noting that in Sweden a Christmas lunch for employees is not normally seen as internal representation and is therefore a taxable benefit for the employees. This also applies if the employees get the food delivered to their home, instead of a Christmas lunch/dinner.

Christmas dinner for customers

• Is a non-deductible expense for the company. On the other hand, deductions are allowed for simple meals and refreshments of lesser value if there is an immediate connection with the business.

Would you like to know more or to get help interpreting what rules apply in your particular situation? Do not hesitate to contact one of our skilled consultants at Accountor.