When to pay tax on prizes and souvenirs, and when not to — the tax service explains
In which cases are prizes, gifts, and souvenirs considered income, and in which cases are they not? In short: not all gifts are taxable income, writes Onliner.
Souvenirs from state bodies — tax-free
When souvenir or commemorative products are presented to participants of official events, delegation meetings, sports or cultural events, such expenses are not considered a person's personal income.
This applies to cases where a person acts as a representative of an organization or state body. The value of the souvenir does not matter — income tax does not need to be paid.
But with prizes, it's more complicated
Prizes, awards, and incentives in cash and in-kind are generally considered income and are subject to income tax. But there are exceptions.
Exempt from tax are:
- prizes to athletes for international and republican competitions — within established limits;
- cash prizes to winners and participants of district, regional, and republican contests, festivals, and other events — within the limits provided by law;
- prizes and gifts in kind (e.g., cups, medals, souvenirs) for winners and participants of such events — without value limitations.
If an organization holds an art contest or a project for students and awards cups, medals, or souvenirs to participants, then tax does not need to be paid.
The same applies, for example, to an industry sports competition: if the prize is awarded in kind, it is exempt from income tax.
When tax will still have to be paid
If an item is transferred to a person for personal use and is not related to their work or an official event, such a gift may be recognized as income — and then tax will have to be paid.
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