Accounting of promotional items

If the item is marked with the company, brand or name of the promoted product or service, its value does not exceed CZK 500 excluding VAT and it is not subject to excise duty, it can usually be treated as a tax-deductible promotional or advertising item under Czech rules.

Example: a company orders 300 metal pens with its logo. The price including printing is CZK 68 excluding VAT per piece. The items promote the company and meet the limit, so they are usually accounted for as a tax-deductible expense.

Gifts above CZK 500 excluding VAT are not automatically prohibited or commercially problematic. They often make sense for VIP clients, employees, business partners or important events. From a Czech tax perspective, however, they usually cannot be treated as low-value promotional items in a simple way.

If the item is merely handed over as a higher-value gift without consideration, it may be representation or a gift. If it forms part of documented advertising cooperation, sponsorship or a service, the company should be able to prove what advertising consideration it receives.

Example: a branded power bank for CZK 890 excluding VAT can be a good business gift, but it is not an ordinary promotional item within the CZK 500 threshold. The accountant should assess whether it is representation, a gift or another documented marketing expense.

When assessing the limit, it is safer to include costs linked to the specific item, such as printing, engraving, embroidery, labels, individual packaging or gift boxes. If several products are combined into one gift set, the value of the set as a whole may need to be considered.

Shipping and handling costs depend on how they are charged and whether they can be directly allocated to a specific item. For this reason, larger orders should be discussed with the accountant before final invoicing where the tax treatment matters.

For ordinary promotional items purchased for the company's economic activity, a Czech VAT payer can generally claim input VAT deduction if it has a valid tax document and the items are used for taxable activities. Under Czech VAT law, the free-of-charge transfer of a low-value gift is not considered a supply of goods if it is made within economic activity and the purchase price excluding VAT does not exceed CZK 500.

Representation is different. Czech VAT law generally restricts VAT deduction for supplies used for representation, except for business samples and low-value gifts under the statutory regime. Higher-value items, gifts without consideration or unusual arrangements should be reviewed individually.

Traceability is important for promotional items. We recommend keeping the invoice, order, calculation, branding proof and, where possible, a photo of the finished item. For larger or higher-value orders, a reasonable distribution record can also be useful.

For ordinary giveaway items at a trade fair, it is not practical to record every recipient. For limited gifts provided to specific partners, however, a list of recipients can be very helpful.

If a company provides something without expecting consideration, it may be a gift. If the purpose is mainly hospitality, relationship building or a higher-value courtesy to a business partner, representation is often considered. If the recipient provides advertising, logo placement, event promotion or another documented service in return, it may be an advertising service or sponsorship with advertising consideration.

The formal wording of the document is not enough on its own. What matters is what was actually provided, for what purpose, to whom and what supporting documents the company has.