Gifts made by business
Many businesses celebrate Christmas by giving presents to Clients or employees.
In order to be compliant with the Italian VAT rules relating to the gifts, businesses must check whether they made a taxable transaction or did they deduct input VAT on purchases.
Input VAT on gifts not being part of the business activity of the taxpayer made to clients or employees shall be VAT excluded. When the value of the gift exceeds 50 Euro, the related input VAT can’t be deducted, while in case the value of the gift is below 50 Euro, input VAT can be entirely deducted. In any case, input VAT on gifts given to the employees is not deductible.
In the case gifts are part of the business activity of the taxpayer, the gifting of goods becomes a taxable event, and the related VAT becomes due by the taxpayer. In such cases, businesses must issue a self-invoice, indicating as taxable the purchasing cost or the production cost, the tax rate, and the VAT due.