What can you give clients?

Generally, such a gift should have an aesthetic or practical purpose. Companies therefore typically give away items such as company calendars, pens or small decorative objects.

In practice, I also often find that business owners want to give their business partners a bottle of good alcohol. The rules on alcohol as a tax-deductible gift are relatively strict. Until 2023, in addition to the rules mentioned below, only still wine qualified. From 2024, the rules became even stricter, and no alcohol can be a tax-deductible gift. If you have bought wine for your business partners, you must give them these gifts before the end of 2023. If you give them out next year instead, the cost will not be tax-deductible.

Finally, another common idea is to give your clients a voucher or gift certificate for various services or goods. Because clients can buy whatever they like with such a voucher, the gift does not meet the condition of having an aesthetic or practical purpose. According to the Ministry of Finance’s position, vouchers are therefore always non-deductible for tax purposes, with no entitlement to reclaim VAT. 🙁

From a VAT perspective

If you are VAT-registered and would like to reclaim VAT on the purchase of these gifts, it is important that the price per gift is no more than 500 Kč excluding VAT. For example, if you want to give away gift packs of coffee, you can simply check their price. If the price per item is below 500 Kč excluding VAT, you are entitled to reclaim VAT. Things are slightly more complicated if you plan to give away gift bundles (e.g. coffee and premium chocolate in one bundle). For bundles, the price of each complete bundle, including gift wrapping (a bag), must be below 500 Kč excluding VAT. 🙂 If the price of a gift is above this limit, you cannot reclaim VAT on its purchase.

What I find very interesting, however, is that alcohol is not a problem from a VAT perspective. So, if you are VAT-registered and buy wine or something stronger as a gift and stay below 500 Kč excluding VAT, you can reclaim the VAT without any problem, even though the cost will not be deductible for income tax purposes. 🙂

From an income tax perspective

For income tax, the relevant limit is also 500 Kč excluding VAT for VAT-registered businesses and 500 Kč including VAT for businesses that are not VAT-registered, but there is an additional condition. These items must bear the company logo, or the name of a service you provide or a product you sell. The gift should advertise and promote your company.

If you plan to give away bundles, the limit of 500 Kč excluding VAT again applies to each bundle, rather than its individual components. If the price of a gift is above 500 Kč excluding VAT or the gift is not properly marked with a logo, the cost of buying it will not be tax-deductible and will fall into the same category as other business entertainment expenses.

As you can see, there are quite a few conditions, as always. I definitely recommend retaining photo or video documentation, as well as a list of the business partners who received gifts.

Sometimes the position regarding client gifts may be less clear. If you are unsure, it is a good idea to get advice before buying them :-).