Staff parties in corona times

For the past 2 years, virologists have strongly advised us not to throw parties. In most cases, the government backed up that advice by banning physical gatherings of large numbers of people. Online parties were not, and still are, not so much fun, but it is possible. How about the tax consequences?

Social advantages

Professional expenses are only tax deductible if they serve to maintain or acquire income. According to the tax authorities, gifts to employees, parties, etc. are not deductible. The tax authorities regard them as 'social benefits'. That is why they are not taxable in the hands of the beneficiary, but they are also not tax deductible for the employer.

There are a few exceptions to this severe rule. Are, among others, considered deductible social benefits:

group trips of no more than one day for the staff

the provision of soup, coffee, tea, beer or soft drinks free of charge during working hours

the provision of fruit to employees free of charge to consume during working hours and at the place of employment (i.e. not to take home).

Gifts and parties

Also gifts to staff and staff receptions are in principle non-deductible social benefits. But again there are some exceptions.

In the category of gifts are, among others, tax deductible:

marriage premiums (in the form of money, gifts, vouchers) up to a maximum of 245 euro

small gifts in kind, in cash or in the form of vouchers, provided that they are given to all employees and they are given during one or more celebrations or annual events, such as Christmas, New Year, Sinterklaas, the patron saint of the sector ( Saint-Eloi, Saint-Barbara...), a birthday, etc. In addition, the gift may not exceed 40 euro per year and per employee, plus 40 euro per year per dependent child at the occasion of Sinterklaas or another celebration that pursues the same social advantage (such as Sint Maarten)

handing over an honorable award (x number of years of service) (max. 120 euro per year per employee).

In the good old pre-corona time, a New Year's or Christmas party was therefore perfectly deductible.

Online party

Do those rules also apply if you organize an online party? Imagine an online meeting with some snacks and drinks from the employer, delivered to your home.

In his answer to a parliamentary question, the finance minister confirmed that the usual rules apply. That means that the cost an employer incurs to send some snacks and drinks to the employee for an online staff party is primarily a social benefit. Consequently, the cost of providing that benefit is in principle not deductible. But the minister also confirms that the tax authorities do allow the deduction of organizational costs incurred on the occasion of a Christmas party, New Year's party, etc.

He then adds that the deductibility also applies to online staff receptions.
He does add, however: "to avoid abuses, this derogation is only allowed if the expenses are of a low value per recipient and they are incurred for the entire staff (and thus not for a specific category of staff or only for company managers)".

It seems that this answer is actually a confirmation of the rules that already apply today, namely that the party must be open to all staff members, without exception, and that the value must not exceed 40 euro per person, per year.

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