Do gifts given to female employees on March 8th incur payroll taxes?

As March 8th – International Women’s Day approaches, one of the most common questions employers ask is:
Are gifts provided to female employees considered taxable income and subject to payroll contributions?

✅ Tax treatment is the same regardless of the gift format

The form of the gift does not change its tax status. Employers may choose to provide gifts in the form of:

• cash,

• gift sets,

• spa treatments,

• vouchers,

• gift cards, etc.

Regardless of the format, these gifts are treated as salary income and taxed accordingly.

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📜 Legal basis for gift-giving to employees

According to Article 120, item 4 of the Labor Law, the employer may regulate the right to other types of income (such as holiday or event-based gifts) through general acts like the Work Rulebook or the Employment Contract.

Additionally, Article 105, paragraph 3 of the Labor Law stipulates that all employee earnings are considered salary, unless explicitly excluded by specific provisions. Therefore, any form of compensation arising from employment, including gifts for Women’s Day, is considered taxable salary.

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📊 Are Women’s Day gifts subject to income tax and social security contributions?

Yes. Gifts provided to female employees on March 8th qualify as employment income and are therefore subject to:

• Personal income tax (10%), and

• Mandatory social security contributions (pension, health, unemployment insurance), according to applicable rates.

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🧾 What is the tax base for gifts?

The tax base depends on the nature of the gift:

• If cash is given → the net amount is grossed up for tax and contributions;

• If a voucher or product is given → the nominal value is grossed up.

📌 Example:
If the gift is a voucher worth RSD 5,000, this amount must be grossed up using the official grossing-up coefficient. The resulting gross value is used to calculate payroll tax and contributions, in the same way as regular salary.

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👥 What if the gift is given to individuals outside an employment contract?

If the recipient is not employed but engaged through another type of agreement (e.g., service contract, director’s agreement, copyright agreement), the gift is considered a contractual payment and is taxed in accordance with the relevant personal income tax provisions.

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🍽️ Gifts in the form of a group meal – representation expense

If an employer organizes a group lunch at a restaurant instead of individual gifts, the expense is classified as a representation cost.

✅ Such expenses must be properly documented with an invoice or fiscal receipt issued in the employer’s name.

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📅 When are gift-related expenses tax-deductible?

Employee gift expenses are recognized for corporate income tax purposes in the accounting period in which the gift is booked as salary, in line with:

• Article 9, paragraph 1 of the Corporate Profit Tax Law.