How Giving Employees Up to €1,500 Tax-Free Can Deliver Real Savings for Your Company
17th December 2025
Rewarding employees is crucial for employee retention and fostering a positive workplace culture. Yet many Irish companies still overlook one of the most cost-efficient ways to do it.
Since 1 January 2025, employers can now give staff up to €1,500 per year tax-free under Revenue’s Small Benefit Exemption (SBE). Used properly, this simple incentive provides a meaningful employee reward, avoids payroll taxes, and reduces employer costs. For businesses seeking predictable, compliant and tax-efficient ways to recognise teams, the SBE is an easy win.
What the Small Benefit Exemption Allows
The updated exemption lets employers give each employee up to €1,500 per year as a non-cash benefit, typically in the form of a gift card, a prepaid digital card, or a store or multi-retailer voucher.
When applied correctly:
- No PAYE, USC or employee PRSI applies
- No employer PRSI applies
- The cost is a deductible business expense
Compared to traditional bonuses, the savings are substantial!
Why It’s a Tax Saving for Employers
- No employer PRSI (11.05%) – A €1,500 cash bonus triggers employer PRSI of €165.75. Under the Small Benefit Exemption, PRSI is zero. For 20 employees, that’s €3,315 saved each year, simply by switching from cash to a compliant voucher.
- Lower gross cost for the same employee benefit – If an employer wants an employee to receive €1,500 net in cash, they must typically pay more in gross salary to cover taxes. Under the SBE, the employee gets the full €1,500 at no extra payroll cost to the employer.
- Fully deductible business expense – Like salaries and bonuses, the cost of the benefit reduces taxable profits.
- Simpler than payroll-based bonuses – Once the benefit is non-cash, within the €1,500 limit and not part of salary sacrifice, administration is minimal. No payroll gross-up. No reporting complexity. No hidden taxes.
Key Rules to Stay Compliant
To ensure the benefit retains its tax-free status, employers must follow these rules:
- Up to two benefits per year, with a combined total not exceeding €1,500.
- Must be non-cash (no cash, transfers, or bank top-ups).
- No salary sacrifice.
- Benefit must be funded entirely by the employer.
- Any amount over €1,500 means the full value becomes taxable, not just the excess.
These rules are simple, but essential.
Why More Employers Are Using the Exemption
With inflationary pressures and tightened recruitment markets, employers are increasingly turning to the SBE as part of:
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End-of-year rewards – Celebrate team achievements with a tax-free benefit that feels personal and meaningful, without adding payroll complexity.
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Appreciation bonuses – Recognise exceptional effort throughout the year with a simple, compliant gesture that delivers full value to employees.
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Retention tools – Use the exemption as part of a broader retention strategy to keep top talent engaged and motivated, especially in competitive markets.
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Wellness and culture programmes – Incorporate the benefit into initiatives that promote wellbeing and strengthen company culture, reinforcing a positive work environment.
This flexibility makes the SBE one of the most practical and impactful benefits available to Irish employers today
Final Thoughts
The increased €1,500 Small Benefit Exemption is one of the most valuable, practical and tax-efficient tools available to Irish employers. It delivers real savings, supports employee morale and enhances overall compensation strategy, without increasing payroll taxes.
If your business wants to incorporate this benefit as part of a broader financial strategy, book a confidential consultation with Chartered Capital today.
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