A non-cash gift (referred to as "token of appreciation" in tax law) is a small benefit in the form of goods or services (not cash) that your employer gives you on special personal occasions. It's a gesture of personal appreciation that goes beyond regular compensation and is intended to strengthen the employer-employee relationship. What makes these gifts special is that, under certain conditions, they are exempt from both tax and social security contributions, making them a popular and straightforward form of recognition. It's important to note the clear distinction from other benefits: This regulation for tokens of appreciation...next to / besidethe monthly €50 tax-free allowance for non-cash benefits (Section 8, Paragraph 2, Sentence 11 of the Income Tax Act). This means that, theoretically, in a single month you could receive both your regular €50 non-cash benefit allowance as well as a tax-free gift in kind for your birthday.
The tax exemption for these gifts in kind or tokens of appreciation is regulated in the Wage Tax Guidelines (Section R 19.6 LStR) and is subject to specific conditions:
- Non-cash benefit/donationIt must specifically be a benefit in kind. Cash gifts are excluded from this regulation and would be subject to normal taxation. Gift vouchers that can be redeemed for goods or services (and do not offer a cash payment option) generally qualify as benefits in kind.
- Special personal occasion:The gift must be connected to a specific, personal event in your life. General occasions like Christmas or Easter don't count here. Typical personal occasions include:
- Your Birthday
- Your Marriage or Civil Partnership
- The Birth of Your Child
- A work anniversary (e.g., 10, 20, or 25 years of service with the company)
- The successful completion of a final examination following vocational training or further education
- Your Recovery After a Long Illness
- Value limit of 60 euros:The value of the gift in kind, including VAT, must not exceed 60 euros. This is aAllowance limitIf the value exceeds this limit by even one cent, the entire gift amount becomes subject to both tax and social security contributions.
Although these personal gifts in kind often involve relatively small amounts, they have a significant impact on employee motivation and feelings of appreciation. They demonstrate that your employer recognizes you as an individual and takes part in important personal milestones. Proper handling and documentation by the employer is crucial for tax compliance. Modern benefit platforms like HelloBonnie can provide support in this area as well. While the focus is often on regular budgets, the platform's flexibility could make it possible to manage such occasion-based gifts in kind. For instance, your employer could unlock a special birthday budget of up to 60 euros through your HelloBonnie account, which you could then redeem using your SmartCard for a personal gift at any of HelloBonnie's many partner locations. This would combine the traditional gesture of gift-giving with modern flexibility and personal choice.