It is very common for self-employed individuals to want to make gifts, such as typical Christmas gift baskets or other presents for their most loyal clients, as the holiday season approaches. Below, we explain everything you need to know about how these expenses are taxed and their deductibility so you can make informed decisions:
- Christmas Gift Baskets:
Christmas gift baskets are not VAT deductible, as they are considered goods provided to third parties (such as employees or clients) and do not meet the requirements for this deduction.
However, they can be deducted in IRPF since they are not considered donations. The only requirement is that they be considered a “regular expense.”
According to the tax authorities, if giving Christmas gift baskets is a recurring tradition, these expenses can be deducted. Therefore, the first year of gifting is not accepted as deductible, but in subsequent years, as long as continuity is demonstrated, it will be possible to apply the deduction.
- Christmas Meals and Dinners:
This is another expense that will not be deductible for VAT but can be for IRPF. This deduction applies only if the meals or dinners are linked to business activities or public relations with suppliers or clients.
- Lottery Tickets:
Special attention must be paid here. When a self-employed person buys lottery tickets for clients, this expense will be deductible for tax purposes. However, it must be justified with an invoice and not exceed 1% of the net income from the business during the tax period.
- Greeting Cards and Small Christmas Gifts:
Greeting cards and small holiday gifts can be deducted for both VAT and IRPF if they are linked to the business activity, promote commercial relationships, and meet the requirements for deductibility.
Common Requirements for These Expenses to Be Deductible:
- The expense must be properly justified with an invoice and payment receipt.
- The expense must be registered in the accounting records as mandatory.