Limitations on VAT deduction for gifts to employees

• Many companies are defining their reward or loyalty policies for both customers and employees.
• It is necessary to evaluate the tax burdens related to the purchase of goods and services given for free.
• The purchase of goods given as gifts to employees cannot be classified as representation expenses.
• The company cannot benefit from the right to deduct VAT even if the products purchased are worth less than 50 euros.
• Services provided to employees for free also require evaluation of the right to deduct VAT.
• The performance towards employees is generally considered an operation outside the scope of VAT.
• The Italian Revenue Agency does not consider a direct and immediate link between the purchase of welfare services and the operations that confer the right to deduct VAT.

Source: eutekne.info

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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