Gift budgets are often set by gut feeling, shortly before ordering and without taking taxes into account. The result is either a gift that is too expensive or a budget nobody can defend. In a recent guide, Logotrade OÜ (Logo.ee) explained how to set an amount per client and per employee and stay within Estonian tax thresholds. Below is a detailed summary; the full article is available on the Logo.ee blog.

In short

• Combine three methods: a share of the marketing budget, an amount based on client value, and segments that join the two.
• Set the budget per recipient excluding VAT, so you can see immediately whether you stay under the 10 € and 21 € thresholds.
• A promotional gift with a logo given to a non-employee is income-tax-free up to 21 €. Above that, the full cost is taxed at 22/78.
• Employee gifts are fringe benefits: 22/78 income tax plus 33% social tax, so the same item costs the company more.
• Justify the budget by cost per recipient and per use, not by the price of a single gift.

Why the budget comes before the product

Starting with a product lets the budget drift – an expensive item gets multiplied across many recipients and the total comes as a surprise. A fixed amount per recipient gives suppliers a clear frame and makes options comparable. Because tax treatment depends on the unit price, the amount also drives the tax outcome. For wider planning, see our guide on planning your promotional gift budget in the Logo.ee blog.

Three methods for setting the budget

1. Share of the marketing budget (top-down). Management decides what share of marketing spend goes to gifts. As a reference, the article cites Gartner's 2025 survey, in which marketing budgets averaged about 7.7% of company revenue; since it covered mostly large companies, treat it as a benchmark rather than an Estonian norm. The method is simple but does not say who should get what.

2. Client value (bottom-up). Set each gift as a share of the client's annual revenue or gross margin, with a cap. It is fair and easy to justify, but requires CRM or sales data.

3. Segments (combined). Split recipients into three or four segments with a fixed amount each, and keep the total within the top-down frame. A typical split: small giveaways for a broad audience, practical items for regular clients, and high-end corporate gifts for key accounts.

Estonian tax thresholds at a glance

The thresholds below follow Estonian Tax and Customs Board guidance as described in the article; always confirm the treatment of a specific gift with your accountant.

• 21 € excluding VAT: logo gifts to non-employees are income-tax-free up to this value. For a set, the value of the whole set counts.
• Above 21 €: income tax of 22/78 applies to the full cost, not just the excess.
• 10 € excluding VAT: up to this value a gift need not carry VAT; above it, a VAT-registered company must charge VAT on the free transfer.
• Logo printing, transport and packaging: business expenses that do not add to the gift's value for income tax.
• Employee gifts: fringe benefits subject to 22/78 income tax and 33% social tax; the 21 € rule does not apply.
• Reception costs: tax-free up to 50 € per calendar month plus 2% of personalised social-tax-liable payments declared since the start of the year. Whether a gift is declared as a gift or a reception cost is worth deciding with your accountant.

A telling illustration: raising a unit price from 20 € to 25 € does not add only 5 € of cost, because income tax then applies to the whole amount.

Employee gifts

The aim of an employee gift is recognition and belonging, not sales. A good principle is that everyone receives the same value for the same occasion – differences should come from the occasion (work anniversary, onboarding, Christmas), not job title. Always calculate with tax included: a 30 € gift adds about 8.46 € of income tax (22/78), followed by 33% social tax. A smaller but more useful item is often a better choice than a bigger, pricier one. Ask your accountant to calculate one sample line before ordering.

Spreading the budget across the year

Many companies overspend in December and have nothing left for spring events. An annual plan with a line for each occasion avoids that:

• Recurring occasions (Christmas, company anniversary, summer day): recipient numbers are known, so amounts can be approved in January.
• Campaigns and trade fairs: more recipients, a lower amount each, and a small buffer in quantity.
• Personal occasions (welcome packs, work and client anniversaries): a fixed amount per type, so decisions do not depend on who orders.
• Reserve: keep part of the budget unallocated for unexpected needs and new clients.

Record every planned amount and the actual cost – next year's budget is easier to defend with real figures.

Worked example: four segments

The article uses invented figures for a B2B service company with an approved annual total of 3,600 € excluding VAT. Key accounts (12 people) receive 40 € each, 480 € in total; as the amount is above 21 €, income tax of 22/78 applies to the full cost – roughly 14 € per recipient – plus VAT. Regular clients (60) receive 19 € each, 1,140 € in total: income-tax-free, but above 10 €, so VAT applies. Other clients (150) receive 7 € each, 1,050 € in total, with no income tax or VAT. Employees (30) receive 30 € each, 900 € in total, as a fringe benefit. That is 252 recipients and 3,570 € before taxes. For key accounts, a gift under 21 € plus a personal card or meeting is a legitimate alternative, as long as the choice is deliberate.

How to justify the budget to management

Finance leaders usually ask what the company gets, not whether the gift is nice. The article offers three arguments. Cost per use: according to the cited ASI 2026 study, a typical promotional product generates about 3,300 impressions over its life at roughly 0.006 USD per impression. Memorability: the same study found that 85% of respondents remember the company that gave them a promotional item. Link to client value: if your segments are based on sales data, you can show that the largest amounts go where business value is highest.

Budget checklist

1. Approve the annual gift total.
2. List recipients and split them into segments.
3. Set the amount per recipient for each segment, excluding VAT.
4. Check each amount against the 10 € and 21 € thresholds, and treat employee gifts as fringe benefits.
5. Have an accountant calculate taxes for one sample line per segment.
6. Keep a reserve for new clients and replacements.
7. Request quotes with segment amounts, asking for product and decoration prices on separate lines.
8. Decide how you will measure results – replies, meetings, repeat orders.

Common mistakes to avoid

• Comparing a VAT-inclusive amount against an excl.-VAT threshold – 27 € including VAT is about 21.77 € excluding VAT, which is over the limit.
• Judging set items separately – three 9 € items in one box make a 27 € gift.
• Applying client rules to employees.
• Having no reserve – someone is always missing from the list in December.
• Budgeting only the unit price and forgetting packaging, cards and transport.
• Deciding too late, which limits choice and makes price comparison harder.

Frequently asked questions

How big should a client gift be? There is no universal figure; base it on client value and check the 10 € and 21 € thresholds.
Does the 21 € limit include logo printing? Not for income tax. For VAT, the tax board's example combined product and logo prices.
Can an employee get a tax-free 21 € gift? No – employee gifts are fringe benefits.
Must clients know about the segments? No, segments are an internal planning tool.

How Logo.ee can help

Logotrade OÜ has served companies from Tallinn since 2004 and delivers across Estonia. Send us your segments and per-recipient amounts and we will suggest suitable products with prices, quantities and deadlines. For inspiration, browse our gift sets or see our portfolio of completed work.

Send us your enquiry

Planning gifts for clients or employees? Send us your quantity, logo and deadline and we will prepare a quote. Start at www.logo.ee.

#LogoEE #Logotrade