Cyprus gives employers one genuinely useful tool for tax-free employee gifting: an annual exemption of up to €300 per employee. But it's an all-or-nothing rule, not a threshold you can dip in and out of. Get one condition wrong and the entire gift, not just the excess, gets added to the employee's taxable emoluments and run through payroll. Here's how the €300 exemption actually works, why cash never qualifies, the separate rules for client gifts, and 12 gift ideas priced to stay comfortably inside the limit.
The €300 gift exemption: one gift, all conditions must be met
Under Cyprus's Income Tax Law 118(I)/2002 (Article 5), and as set out in the Tax Department's 2018 Fringe Benefits Guide, an employer can give each employee one gift per tax year worth up to €300 without it being added to that employee's taxable emoluments. In the year an employee gets married, the allowance extends to two such gifts.
The catch is that this exemption is all-or-nothing, and every condition has to hold at the same time:
- The gift's value must not exceed €300.
- It must be the employee's only such gift for the tax year (or the second, in a marriage year).
- The employer must not claim the gift as a deductible business expense.
If any one of those conditions fails, whether the value creeps over €300, a second unrelated gift is given in the same year, or the company books it as a deductible cost, the exemption doesn't just shrink to cover the excess. The entire gift becomes taxable, added in full to the employee's emoluments and taxed through PAYE. There's no partial relief for the first €300; miss a condition and the whole value is on the table.
In practice, this means keeping the value clearly under €300 with some margin, and keeping it to a single gift per employee per year. It also means deciding upfront whether the business wants the deduction on the expense or the exemption for the employee, since it can't have both.
Cash is always fully taxable
The €300 exemption only ever applies to gifts, not to cash. Any cash payment to an employee, however small and whatever the occasion, is treated as ordinary employment income. It's added to emoluments and taxed via PAYE in full, with no allowance carved out. If the intention is to keep a gift out of taxable income, it needs to be an in-kind item (a physical product, a voucher, or a comparable benefit), not money handed over directly.
12 gift ideas
All 12 products below sit well under the €300 ceiling on their own, which leaves room to combine a couple for a higher perceived value while still keeping the per-employee gift within Cyprus's exemption rules (assuming it stays a single gift for the year and isn't claimed as a deductible expense).
1. Hoodie – The Rex: the flagship piece
A hoodie is one of the highest-perceived-value items on this list, and it stays in daily rotation for months, keeping your branding visible long after the gifting occasion is over, well inside the €300 exemption.
- Material: midweight cotton-blend fleece.
- Branding: embroidery or screen print on chest or sleeve.
- Order: MOQ 100 · from €40.09/unit.
2. Sports Socks: the safe favourite
An inexpensive, practical add-on that pairs well with a bigger item on this list or works as a standalone token for larger teams where budget per head is tight.
- Material: cotton-blend performance knit.
- Branding: woven logo panel.
- Order: MOQ 100 · from €4.00/unit.
3. Recycled Steel Bottle: everyday hydration
Sustainability-minded and genuinely useful, a recycled steel bottle is the kind of practical, everyday gift employees keep on their desk rather than in a drawer.
- Material: recycled stainless steel.
- Branding: laser engraving or full-colour print.
- Order: MOQ 50 · from €11.00/unit.
View the Recycled Steel Bottle →
4. A5 Notebook: the practical classic
A low-cost classic that works for any occasion, easy to personalise and a natural pairing with a pen or a larger item if you want to build out the gift.
- Material: hardcover, recycled paper pages.
- Branding: debossing or full-colour cover print.
- Order: MOQ 100 · from €4.58/unit.
5. Premium Tote Bag: the lightweight carry
A sturdy tote gets daily use for groceries, gym kit or laptops, giving your branding far more real-world exposure than most desk gifts.
- Material: heavyweight canvas.
- Branding: screen print or embroidered logo.
- Order: MOQ 100 · from €6.44/unit.
6. Knitted Scarf: the cosy extra
A seasonal favourite for winter gifting rounds, a soft knitted scarf feels personal and comfortable rather than corporate, which helps it land well as an employee gift.
- Material: acrylic knit.
- Branding: woven label or jacquard pattern.
- Order: MOQ 100 · from €7.66/unit.
7. Baseball Cap: the everyday accessory
A simple, well-made cap is one of the most-worn branded items in any merchandise programme, and it works equally well as a standalone gift or bundled with apparel.
- Material: cotton twill.
- Branding: embroidered front panel.
- Order: MOQ 100 · from €8.34/unit.
8. Espresso Mug: the desk essential
A well-made espresso mug earns a permanent spot on a desk or kitchen counter, giving repeat, low-key brand visibility every time it's used.
- Material: ceramic.
- Branding: full-colour print or laser engraving.
- Order: MOQ 108 · from €8.44/unit.
9. Bamboo Tea Bottle: the natural choice
A bamboo-accented tea bottle stands out from the usual steel flask and appeals to employees who want a warmer, more natural-looking everyday item.
- Material: stainless steel body with bamboo lid accent.
- Branding: laser engraving.
- Order: MOQ 50 · from €18.70/unit.
10. RollTop Backpack: the everyday bag
A roll-top backpack is a genuine step up as a gift, practical for the daily commute and distinctive enough to feel like a considered choice rather than a generic freebie, while still landing comfortably under the €300 threshold.
- Material: water-resistant polyester with roll-top closure.
- Branding: embroidered or debossed logo patch.
- Order: MOQ 25 · from €24.57/unit.
11. Noise-Cancelling Headphones: the premium pick
For teams that want a tech-forward gift, noise-cancelling headphones are one of the most appreciated options on this list, useful for remote work, commuting and travel alike, and still comfortably under the exemption ceiling.
- Material: ABS plastic with padded ear cushions.
- Branding: laser engraving or printed logo on the ear cup.
- Order: MOQ 50 · from €24.46/unit.
12. Wireless Powerbank: useful everyday tech
A wireless powerbank solves a real everyday problem, which makes it one of the more consistently used tech gifts rather than something that ends up in a drawer.
- Material: aluminium and ABS plastic housing.
- Branding: laser engraving or full-colour print.
- Order: MOQ 50 · from €18.39/unit.
What about client gifts?
Client gifts sit under a different part of the tax code. Instead of the €300 employee exemption, deductibility is governed by the general "wholly and exclusively" test in Article 9 of the Income Tax Law: a business expense, including a client gift, is deductible if it was incurred wholly and exclusively for the production of income.
For client gifts specifically, deductibility is capped at the lower of two figures: 1% of the company's gross income, or a fixed ceiling. That fixed ceiling has stood at €17,086 through 2025. There are reports that it will be raised to €30,000 from 2026 onward, but we haven't been able to fully confirm this figure from a primary source at the time of writing, so treat it as indicative rather than settled and check the current threshold with your accountant before relying on it for planning.
On VAT, the general EU principle that gifts of small value and samples fall outside the scope of VAT likely applies in Cyprus too. However, we don't have a single verified euro figure or percentage threshold specific to Cyprus to cite here, and rather than guess, we'd recommend confirming the current position directly with a Cypriot tax advisor before treating any particular gift value as automatically outside VAT scope.
Common mistakes
- Giving a second gift in the same tax year. Even a small additional gift, like a holiday hamper on top of an anniversary present, disqualifies the whole €300 exemption for that employee (outside of a marriage year, which allows two).
- Claiming the gift as a deductible business expense. The exemption requires the employer to forgo the deduction. Booking the cost against taxable profit while also treating it as tax-free for the employee breaks the rule and makes the full value taxable.
- Treating cash or a cash-equivalent voucher as a tax-free gift. Only in-kind gifts can qualify for the €300 exemption. Cash, however small, is added to emoluments and taxed through PAYE in full.
Note: this article is a general explainer, not tax advice. Thresholds and rules can change, and how they apply can depend on your business's specific circumstances, so confirm the details with a licensed Cypriot tax advisor or accountant before relying on them.
Order gifts for your team
Every product above is fully customisable with your branding and available in business order quantities. Browse the full range in the Sunday catalogue to put together a gifting programme that fits comfortably within Cyprus's €300 employee gift exemption.
