A staff party in the age of the coronavirus
March 2022 – For the past two years, virologists have strongly advised against the organisation of parties. In most cases, the government has put this advice into practice by banning large physical gatherings. Online parties were not - and still are not - as user-friendly, but they are allowed. What about tax?
Social benefits
Business expenses are only tax deductible if they are used to retain or acquire income. Gifts to staff members, small parties, etc. are not included in this, according to the tax authorities. The tax authorities consider them to be social benefits. They are therefore not taxable in the hands of the recipient, but are not tax deductible in the hands of the giver either.
There are some exceptions to this strict rule. Among others, the following are considered as deductible fringe benefits
group trips of maximum one day for the staff ;
free distribution of soup, coffee, tea, beer or soft drinks during working hours;
free distribution of fruit to employees, to be consumed during working hours and at the workplace (and therefore not to be taken home).
Gifts and parties
Gifts to staff and parties organised for staff are in principle non-deductible fringe benefits. But again, there are some exceptions to this principle.
In the category of gifts, the following are among others tax deductible
wedding bonuses (in the form of cash, gifts, payment vouchers) up to a maximum amount of 245 euros;
small gifts in kind, in cash or in the form of payment vouchers, provided that they are offered to all members of staff and on the occasion of one or more annual celebrations or events, such as Christmas, New Year's Day, St. Nicholas' Day, the sector's patron saint's day (St. Eloi's Day, St. Barbara's Day, etc.), a birthday, etc. In addition, the gift may not exceed 40 euros per year per employee, plus 40 euros per year per dependent child on the occasion of St Nicholas's Day or another holiday of the same social nature (such as St Martin's Day);
the award of an honorary distinction (x years of service) (maximum 120 euros per year and per worker).
In the blessed days when the coronavirus did not exist, a New Year's or Christmas party was therefore perfectly deductible.
Online party
Do these rules also apply if you are organising a small online party? We are thinking of an online meeting with appetizers and drinks delivered by the employer to the staff members' homes.
In response to a parliamentary question, the Minister of Finance confirmed the applicability of the usual rules. This means that the costs an employer incurs in sending snacks and drinks to its employees for an online staff party are primarily a fringe benefit. Therefore, the cost of providing this benefit is in principle not deductible. However, the Minister also confirms that the tax authorities do allow the deduction of organisational costs incurred in connection with a Christmas party, New Year's party, etc.
He adds that the deductibility also applies to online receptions organised for staff.
However, it states that: "to avoid abuse, this exemption is only allowed if the expenses are of low value per beneficiary and are made for the whole staff (and therefore not for a specific category of staff or only for company executives).
It seems that this answer is in fact a confirmation of the rules already applicable at present, namely that the party must be open to all staff members, without exception, and that the value cannot exceed 40 euros per person per year.
