Christmas gift-giving under the lens of taxes: A practical guide for 2025

With the Advent season upon us, the traditional question arises once again – what gift will bring joy this year? For companies, Christmas gifts are an opportunity to showcase their identity, express gratitude for cooperation, and strengthen the relationships on, which they rely throughout the year. In 2025, however, corporate gift-giving takes place in an environment where the rules have become significantly stricter in recent years. What was tax-free or tax-deductible two or three years ago now often requires careful evaluation of the form and value of the gift.

And since companies usually deal with Christmas purchases in larger volumes, making the wrong choice may backfire. The following text summarizes the key rules for giving gifts to employees and business partners – all in the context of pre-Christmas practices in 2025.

Employees: Christmas gifts are subject to limits and formal rules

Christmas gifts for employees used to be one of the popular benefits exempt from income tax in the past. However, with the 2024 tax changes taking effect, this flexibility disappeared and 2025 continues in the same regime. So, anyone expecting a traditional Christmas package at work should know that the income tax exemption is much stricter than before.

Limited exemption can only be applied to non-monetary transactions. So, a Christmas voucher for books or theatre tickets are fine from a non-monetary point of view, but a cash bonus or a “gift allowance” in your salary is not – these are fully taxable income and subject to insurance contributions.

The previously common Christmas gift from the Fund for Cultural and Social Needs of up to CZK 2,000 has been completely abolished since 2024. This scheme continues in 2025. Thus, if an employee receives a Christmas dinner voucher or a watch for a job well done, it is taxable income – unless it is a benefit falling under the non-cash benefit under Section 6(9)(d)(2) of the Income Tax Act (ITA), which are earmarked for culture, sport, recreation, education, etc.

All exempt non-monetary benefits, including Christmas benefits, that meet the non-monetary form and the above-mentioned defined purpose are counted towards the annual limit of ½ of the average wage (i.e., the limit of CZK 23,278.50 applies for 2025). Christmas gifts can therefore “use up” a significant portion of the annual limit, and it can also be assumed that the limit is often already exhausted at the end of the year. In addition, point 1 of the same provision allows the exemption of benefits of medical, therapeutic, hygienic or similar nature if they come from a registered medical establishment. In addition, it has its own limit, which is equal to the average wage for the tax year.

Employers: Christmas benefits as a cost? Only to the extent that it is taxed

From the employer’s perspective, the Christmas gift-giving season brings the traditional dilemma: how to give employees a nice gift while keeping costs tax-efficient.

For non-monetary benefits related to culture, recreation, sports, etc., which we mentioned in connection with the exemption limit, the following rule clearly applies: 
What is exempt for the employee is non-taxable for the employer.
What is taxed for the employee can be tax deductible.

This principle has a significant impact on Christmas practices. If an employer purchases a wellness voucher for the entire team, for example, and the value fits within the above-mentioned exemption limit that applies to each employee separately, the team will be satisfied – but the company will not be able to claim the cost on its tax return. However, if the value of the gift exceeds the limit and enters the employee’s tax base, the excess portion becomes a tax-deductible cost. For businesses planning larger Christmas budgets, this difference can have a significant impact on the tax base.

All other gifts that do not fall within the limited exemption on the part of employees under Section 6(9)(d)(2) of the ITA are then, from the employer’s perspective, non-tax deductible costs under Section 25(1)(t) of the ITA, unless they meet the definition of an advertising or promotional item, which we discuss below.

Business partners: Christmas gifts have a strict limit and labelling

Giving gifts to partners and clients is a common practice before Christmas, but the year 2025 brings no relaxation in this area. On the contrary – the rules are fixed and companies have to be careful not to let Christmas gifts become a non-tax expenditure.

Only gifts that meet the following criteria can be considered tax-deductible promotional items:

• they do not exceed the value of CZK 500 excluding VAT,
• they are not subject to excise duty,
• they are visibly marked with the company’s trade name or trademark.

In practice, this means that the popular Christmas wine or, in many cases, a luxury gift basket can no longer be considered a tax-deductible advertising item. Companies can still give them, but they will always be considered non-tax expenses.

VAT: Small Christmas gifts still follow their own rule

Fortunately, there has been no tightening of VAT. In 2025, the following still applies: gifts up to CZK 500 excluding VAT:

• are not considered supply of goods,
• are not subject to output VAT,
• and they are eligible for input VAT deduction if related to an economic activity.

This scheme remains advantageous for companies, especially when gifting small items with logos to customers or partners.

In conclusion: Corporate Christmas shopping requires planning

While Christmas is supposed to be a season of joy, it is often a time of heightened caution for accounting and finance teams. The year 2025 does not bring a revolution to the gift tax regime, but the consequences of the changes from the last two years are now fully manifested in practice. Setting Christmas benefits and gifts correctly can therefore be the difference between a nice treat and a tax risk. If you would like our assistance with assessing the tax treatment of your gifts, please do not hesitate to contact us.