As long as we have to keep asking these questions, it is clear that the tax rules around (tax-free) allowances and benefits in kind are certainly not simple yet!
Wage =
“all that is enjoyed from employment or former employment”. This definition contained in Section 10 of the Payroll Tax Act is, if all goes well, hammered in to all classes on payroll tax. Added to the definition are: “Including that which is reimbursed or provided in the course of employment.”.
Flower
If you receive a flower from your employer, for example because you are ill (or a fruit basket), for your birthday or because you are celebrating an anniversary, it may be wages. The question is whether the provision of the flower has a sufficiently strong link to the employment to be considered wages.
This is not the case when the flower bouquet tends to be given out of goodwill, sympathy or because of the personal relationship, rather than from an employer's perspective. For the funeral wreath and the fruit basket, there is little discussion about this. These are not seen as wages.
Petey
But for the flower, the Inland Revenue sees it differently. To avoid squeamish discussions, it has been approved that in situations where others than employees also receive a (personal) gift, the employer's gift is not considered salary. But this is subject to strict conditions:
- it must be a personal gift in kind (i.e. not money or vouchers);
- that the employer would also give to others (other than employees) in other similar situations;
- the invoice value (including VAT) must not exceed €25.
In order not to make it too fussy, until recently the delivery costs of the flower did have to fall within the €25 amount. If not, the employer had to make a plausible case that the provision of the flower was not salary.
From the most recent edition of the Payroll tax handbook it appears that the tax authorities have now apparently come to realise that this is rather niggardly. The approval has now been amended: the flower may cost a maximum of € 25 and then it may also be delivered to the employee. Just make sure the delivery costs are charged separately.
We assume that the wider allowance will also apply to florins provided to employees before 1 October 2019.