Spiced Biscuits, Chocolate Letters, Christmas Treats, and the WKR
As the end of the year approaches and the festive season is once again upon us, it's time for spiced biscuits (pepernoten), chocolate letters, and Christmas wreath cookies.Within the Work-Related Costs Scheme (WKR), there is a specific provision known as the small gifts rule. This rule states that:
then this small gift does not constitute taxable income.
One might therefore expect that a customary chocolate letter or some Christmas cookies given for home enjoyment would fall under this provision. Unfortunately, the Dutch Tax Authorities have stated that the small gifts rule does not apply to gifts such as chocolate letters, spiced biscuits, or wreath cookies when given by an employer. So if you provide these kinds of treats to your employees, you risk being left with a bitter aftertaste…
Only if you designate these as final taxable wages under the WKR can the chocolate letters, spiced biscuits, or cookies be treated as actual gifts and provided tax-free to employees. If the well-known treats are available in the office pantry or coffee corner, they are considered snacks and can be provided tax-free. However, if your employee takes the chocolate letter home instead of consuming it at the workplace, you must include its value within the discretionary scope ("vrije ruimte") of the WKR.
Discretionary Scope in 2024 or 2025?
The discretionary scope is based on the total annual taxable payroll. In both 2024 and 2025, employers can provide untaxed allowances and benefits to employees up to 1.92% of the first €400,000 of the wage sum, and 1.18% of the amount above that. If this threshold is exceeded, the employer owes 80% wage tax on the excess amount. If your 2024 discretionary scope has already been fully used, it may be wise to replace your Christmas gift with a New Year’s gift in early 2025.
Christmas Gifts, Dinner, or Drinks
A Christmas gift—such as the traditional Christmas hamper—qualifies as wages. However, it can be designated as final taxable wages under the WKR so that the gift may be given to employees tax-free. But what about a Christmas dinner or the annual Christmas drinks?
If the employer decorates the workplace festively and only hosts a Christmas drink event there, this is not considered taxable. Under the WKR, snacks and drinks consumed at the workplace are subject to a zero valuation, meaning they don't impact the discretionary scope. A drink held at the office doesn’t reduce your free space.
However, if you hire a caterer to provide a buffet, your Christmas drinks quickly become a Christmas dinner. In that case, a standard amount of €3.90 per attending employee (2024) must be counted toward the discretionary scope. If the event takes place outside the workplace, the rules go even further—the full invoice amount (including VAT) must be attributed to the discretionary scope.
Curious about the possibilities for a festive and tax-friendly celebration?
Or would you like to check whether you still have any WKR discretionary space available this year? Don’t hesitate to contact Bart van Gool, Aniek Versantvoort, or Maud Oudenhuijzen from our Human Capital team. They’ll be happy to assist you.