What can be deducted as an expense and what not, can deduct VAT for a gift to employees, some gifts are considered as deferred amount of redundancy? Useful information for a pampering employer.
A month before the holidays, and the hottest topic of conversation at the corner cafe and office corridors is a long-awaited gift for the holiday. So employees expect to embolden them the hard work, but just before you pull out your credit card, or purchase a chocolate or shop vouchers, it is important to make sure you fully understand all of the tax imposed on the employer that gives gifts. So whether you plan to give your employees a basket for the holiday, buy stamps or Gift card, the following text should be read carefully.
Holiday gifts given to employees in the form of money or a gift in form of real money, are considered by the tax authorities as a supplement to the salary. For the supplement given to the employee is required to pay income tax. From the perspective of the employer, the employee gift amount is also committed to national insurance, but because is considered as a component of an employee’s salary, then this addition may be deductible as an expense. By the way, in terms of tax, the employer cannot deduct the VAT even if he received an invoice for the gift he bought his employees.
Is important to know that gifts with monetary value such as vouchers, a basket of candy, etc. can determine the tax authorities to tax it on the value of the benefit to the employee. Hence, even if the employer bought vouchers totalling NIS 100, at a cost of 90 NIS, the employee will be taxed for gift worth NIS 100.
Compared to employees, a gift given to customers or suppliers can be registered as an expense, but this time the recipients of the gifts do not have to pay tax.
All this raises pertinent to the amount of NIS 210 per person per year. Gifts in large amounts would be considered as expenses and will be charged excess advance tax payments. In addition, the benefit of taxation need to maintain orderly registration of all workers and causes of grant gifts.
Just before dispersing we recall that, contrary to widespread urban legend, according to which every employer must provide at least a gift for employees annually, there is no such legal obligation in the labour law. It is important to note that the duty of awarding a holiday gift takes place in cases where this paragraph is defined in the employment contract and when the employee signed as part of the collective agreement and so on. On the other hand, if you choose to give a holiday gift, be sure to give gifts to all workers and not discriminate among them, since any such discrimination is illegal.