Work-Related Costs Scheme and Small Gifts 2025

From Horses on the Roof to Reindeer and a Sleigh
As the year draws to a close, the holiday season is once again approaching. The time of white horses, spiced cookies, chocolate letters, reindeer, and Christmas wreath pastries is just around the corner.

Within the work-related costs scheme (WKR), the so-called small gifts exemption is included, as you may know. This exemption stipulates that:

• the employer gives the employee a small gift based on a personal relationship rather than the employer–employee relationship; AND
• the gift is not money or a gift card; AND
• the value does not exceed €25 (including VAT); AND
• the small gift does not constitute taxable wages.

You would therefore expect that the traditional chocolate letter or wreath pastries for employees to take home could be provided tax-free under this exemption. Unfortunately, the Dutch Tax Authorities have stated that the small gifts exemption does not apply to gifts of chocolate letters, spiced cookies, or Christmas wreath pastries from an employer to employees. So if you provide these treats to your staff, be careful not to end up with an unpleasant aftertaste…

Only by designating these items as final taxable wage within the WKR can the letters, cookies, or pastries be treated as a “true” gift to the employee. If these goodies are placed in the coffee corner or pantry at the workplace, they qualify as snacks and may be provided tax-free. However, if an employee takes the chocolate letter home instead of consuming it at work, the value of that letter must be allocated to the WKR’s discretionary scope.

Discretionary scope in 2025 or 2026?
The discretionary scope is based on the total annual taxable payroll. In both 2025 and 2026, employers may grant tax-free reimbursements and benefits up to 2% of the taxable payroll up to €400,000, and 1.18% on the excess. If the discretionary scope is exceeded, the employer must pay an 80% final levy on the excess amount. If you have already used the full discretionary scope for 2025, you may want to consider replacing the Christmas package with a New Year’s gift in early 2026.

Christmas gift, dinner or drinks
A Christmas gift—such as the classic Christmas hamper—constitutes taxable wages. This wage component may also be designated as final taxable wage under the WKR so that the gift can be provided tax-free to the employee. But what about a Christmas dinner or the annual Christmas drinks?

If the employer decorates the workplace festively and only hosts a Christmas drinks event, this can be done tax-free. Under the WKR, the value of beverages and small snacks is subject to a nil valuation, meaning it does not affect the discretionary scope. Drinks at the workplace therefore do not reduce the available WKR space. However, if you decide to hire a caterer to provide a buffet, the Christmas drinks event becomes a Christmas dinner. In that case, a standard amount of €3.95 per attending employee (2025) must be allocated to the discretionary scope. For Christmas drinks or dinner outside the workplace, the rules are even stricter: the full invoice amount (including VAT) must be charged to the discretionary scope.