In 2023, significant changes were implemented in the Work-Related Costs Scheme (WKR) and the Small Gifts Scheme. These adjustments have direct consequences for companies that want to give business gifts and flowers to their employees. Let's delve deeper into what these changes mean for your company.
The 2023 Work-Related Costs Scheme (WKR)
The WKR is a tax scheme that allows employers to provide tax-free allowances and benefits to their employees. In 2023, the discretionary margin percentage for the WKR is 1.7% of the total taxable payroll. This means that as an employer, you can spend up to this percentage of the payroll tax-free on items such as Christmas hampers, company outings, and business gifts.
What changes for business gifts and flowers? If a business gift or a bouquet of flowers is given to an employee, it usually needs to be included in the discretionary margin of the WKR. However, there are exceptions: some gifts fall under the Small Gifts Scheme.
The Small Gifts Scheme
The Small Gifts Scheme is part of the WKR and allows companies to give small gifts to employees without it affecting the discretionary margin under the Work-Related Costs Scheme. To qualify for the Small Gifts Scheme, a gift must meet two conditions:
1. The maximum amount per gift is €25 including VAT, but excluding any shipping costs.
2. It must not be related to the employer-employee relationship.
The latter means that the Small Gifts Scheme applies when the gift is given, for example, due to a wedding, birthday, or the birth of a child. If the gift is given for a work anniversary or as a Christmas hamper, there is a connection to the employer relationship, and it does not fall under the Small Gifts Scheme. Gift vouchers also do not qualify under the Small Gifts Scheme.
Tax-Free Tokens of Appreciation for Employees
This is good news for companies that want to express their appreciation through small gestures. Think of a bouquet of flowers or a BloomsBox for a birthday, as a maternity gift, or as a token of appreciation for a special achievement. Thanks to the Small Gifts Scheme, you can provide these types of gifts to your employees tax-free.
Conclusion
In 2023, the Work-Related Costs Scheme remains an important tool for employers to provide tax-free allowances and benefits to their staff. The Small Gifts Scheme offers additional flexibility for giving gifts such as flowers and BloomsBoxes for personal occasions. As long as the value of the gift does not exceed €25 including VAT, you do not have to charge it to the discretionary margin.