Lithuania's tax-free gift allowance for employees looks simple on paper: €200 per employee per calendar year. In practice, it hides one nuance that trips up a lot of employers: the income tax rule and the social insurance rule don't always move together. This guide walks through the €200 exemption, the cash-versus-in-kind distinction for Sodra contributions, 12 gift ideas that fit comfortably within the limit, and the separate (and more complex) rules for gifts to clients and business partners.
The €200 employee gift exemption
Under Article 17(1) of the Gyventojų pajamų mokesčio įstatymas (Law on Personal Income Tax), an employer can give each employee gifts worth up to €200 per calendar year without triggering income tax (GPM, gyventojų pajamų mokestis). This is a combined cap: cash gifts and in-kind gifts from the same employer are added together against the same €200 ceiling, not tracked separately.
Lithuania uses an excess-only mechanic, not a cliff edge. If an employer gives an employee gifts worth €260 in a year, only the €60 above the €200 threshold is taxed as employment income. The first €200 stays exempt regardless of how the total splits across cash and in-kind gifts.
Where it gets more complicated: Sodra. Sodra (Valstybinio socialinio draudimo fondo valdyba, Lithuania's social insurance fund) does not always mirror the GPM treatment, and the difference depends entirely on whether the gift is cash or in-kind:
- Cash gifts: Sodra contributions apply to the entire cash amount from the first euro, regardless of the €200 GPM exemption. A €150 cash gift, comfortably under the income-tax threshold, still carries Sodra contributions on the full €150.
- In-kind gifts: Sodra follows the same €200 exemption as GPM. Below €200 in in-kind gifts, there is no Sodra liability at all; only the amount above €200 attracts both GPM and Sodra.
This split matters in practice. Two gifts of identical value, one paid as cash and one given as a physical product, can carry meaningfully different social insurance costs even though the income tax treatment looks the same on the surface. Employers who plan gifting budgets around the €200 GPM threshold alone, without checking whether the gift is cash or in-kind, routinely underestimate the true cost of a cash gift.
12 gift ideas
Because in-kind gifts get the more favourable Sodra treatment, and because well-made branded merchandise tends to land better than a cash top-up anyway, here are 12 products priced to fit comfortably within the €200 exemption.
1. Hoodie – The Rex: the flagship piece
A heavyweight 280 gsm organic cotton hoodie that employees actually wear, and one of the most popular gifting items in the catalogue, well within the €200 exemption.
- Material: 90% organic cotton, 10% polyester.
- Branding: embroidery, print, or patches.
- Order: MOQ 100 · from €40.09/unit.
2. Sports Socks: the safe favourite
Sunday's most-ordered item: a small, unexpected gift that always lands well and leaves almost the entire €200 exemption untouched.
- Material: 80% cotton, 17% polyamide, 3% elastane.
- Branding: knitted-in logo zones.
- Order: MOQ 100 · from €4.00/unit.
3. Recycled Steel Bottle: everyday hydration
Vacuum insulation in recycled stainless steel: a gift that gets used and seen every day, at a price that leaves nearly all of the €200 exemption unused.
- Material: recycled stainless steel.
- Branding: laser engraving or print.
- Order: MOQ 50 · from €11.00/unit.
View the Recycled Steel Bottle →
4. A5 Notebook: FSC-certified paper
An A5 hardcover with elastic closure and ribbon marker: practical, with a traceable material story, and one of the lowest-cost items on this list.
- Material: FSC-certified paper, PU cover.
- Branding: debossing or print on the cover.
- Order: MOQ 100 · from €4.58/unit.
5. Premium Tote Bag: the lightweight carry
A heavyweight cotton tote with a premium feel: everyday enough to actually get used, and comfortably under the €200 limit.
- Material: 270gsm cotton.
- Branding: print or custom straps.
- Order: MOQ 100 · from €6.44/unit.
6. Knitted Scarf: the cosy extra
A high perceived-value item for a winter or year-end gift, priced well inside the €200 ceiling.
- Material: 80% viscose, 20% polyester.
- Branding: woven label.
- Order: MOQ 100 · from €7.66/unit.
7. Baseball Cap: the everyday accessory
An affordable, highly visible accessory that works all year round and stacks easily with other small items within the same €200 limit.
- Material: 100% cotton.
- Branding: embroidery.
- Order: MOQ 100 · from €8.34/unit.
8. Espresso Mug: the desk essential
A proper espresso cup for the coffee obsessives on the team: a small gift that still gets used daily.
- Material: ceramic.
- Branding: debossed or printed logo.
- Order: MOQ 108 · from €8.44/unit.
9. Bamboo Tea Bottle: the natural choice
A bamboo exterior over a durable stainless steel interior: a warmer-looking alternative to an all-metal bottle, and an easy fit under the limit.
- Material: stainless steel, bamboo.
- Branding: laser engraving or print.
- Order: MOQ 50 · from €18.70/unit.
10. RollTop Backpack: the everyday bag
A water-resistant backpack with a laptop compartment that quickly becomes someone's everyday bag, and still leaves headroom under the €200 limit.
- Material: GRS-certified recycled PU, water-resistant.
- Branding: print or embroidery.
- Order: MOQ 25 · from €24.57/unit.
11. Noise-Cancelling Headphones: the premium pick
The highest-value pick on this list, and still comfortably inside the €200 exemption on its own.
- Material: recycled ABS, ANC + ENC, foldable.
- Branding: digital print or doming.
- Order: MOQ 50 · from €24.46/unit.
12. Wireless Powerbank: useful everyday tech
A magnetic wireless powerbank in recycled ABS plastic: genuinely useful for any commute or business trip, and well within the €200 threshold.
- Material: recycled ABS plastic.
- Branding: pad print or digital print.
- Order: MOQ 50 · from €18.39/unit.
What about client gifts? Two very different categories
Gifts to clients and business partners in Lithuania fall into two categories with very different tax treatment, and the distinction hinges on who receives the gift and how broadly it is distributed.
Reprezentacinės sąnaudos (representation expenses). This category covers gifts given to specific, named business partners: a bottle of wine sent to a particular client's procurement manager, a hamper delivered to a named contact at a partner company. These are only 50% deductible for corporate tax (pelno mokestis), and the deductible portion is further capped: total deductible representation expenses for the tax period cannot exceed 2% of the company's total income for that period. Both limits apply together, whichever bites first sets the actual deduction.
Reklamos sąnaudos (advertising expenses). This category covers low-value branded items such as pens, lighters, or t-shirts, or prizes, distributed to an indefinite or broad group of existing or potential customers rather than to a specific named partner. Because the recipient pool is open-ended rather than a named individual, these items are fully deductible for corporate tax, with no 50% haircut and no 2%-of-income ceiling.
The line between the two categories is about the recipient, not the item. The exact same branded pen given to one named contact as a personal thank-you is a representation expense; a box of the same pens handed out at a trade show to any visitor who wants one is an advertising expense. Getting this classification wrong, or not tracking it at all, is one of the most common corporate-tax mistakes in Lithuanian gifting programmes.
VAT on gifts to clients and partners. Lithuania also has a "small-value gift" rule (nedidelės vertės dovana) for VAT purposes. A gift worth up to €75 excluding VAT, per recipient per calendar year, triggers no output VAT on the free transfer. Two details matter here. First, VMI (the State Tax Inspectorate) aggregates every small gift given to the same recipient across the year when checking the €75 cap, so five separate €20 gifts to the same client count as €100 against the threshold, not five independent transfers. Second, once the €75 threshold is crossed, output VAT is due on the full value of the gift, not just the amount above €75. A separate, lower €10-per-item threshold applies specifically to mass free giveaways handed out to customers at promotional events, distinct from the €75 small-value-gift rule for named recipients.
Common mistakes
- Assuming Sodra treats cash and in-kind gifts the same way. It doesn't. Cash gifts carry Sodra contributions on the entire amount from euro one, while in-kind gifts share the same €200 exemption as GPM. Budgeting a cash gift as if it had the same social insurance cost as an equivalent in-kind gift understates the true cost.
- Confusing a representation gift with an advertising item. A gift to a specific named business partner (reprezentacinės sąnaudos) and a low-value item broadly distributed to an indefinite group of customers (reklamos sąnaudos) receive very different tax treatment: 50% deductible with a 2%-of-income cap versus fully deductible with no cap. Treating the two as interchangeable can mean claiming a deduction that doesn't actually apply.
- Forgetting that VMI aggregates small gifts to the same recipient. The €75 VAT small-value-gift threshold isn't a per-gift test, it's a per-recipient, per-year test. Several small gifts to the same client can add up to breach the €75 cap even if no single gift does, triggering output VAT on the full combined value.
Note: this article is a general explainer, not tax advice. Lithuanian thresholds and rules, including the €200 employee gift exemption and the €75 VAT small-value-gift threshold, can change, so confirm the current figures with your buhalteris 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 stays comfortably within Lithuania's €200 tax-free limit.
Want more ideas? See our 20 tax-free gift ideas for employees in Lithuania for a fuller shortlist spanning apparel, bags, drinkware, tech, and stationery, all priced in EUR.
