It is not permissible to congratulate non-Muslims on their holidays, and also to display these holidays such as the "Christmas tree" and make cakes with their symbols.
Our task as Muslims is to invite them to enter Islam, not to compliment them on their religions and congratulate them on what they believe to be the birth of the Lord or the Son of the Lord. Our Prophet, peace be upon him, did not do this, and neither did his companions, his followers, or any of the scholars of the nation throughout fourteen centuries until the era of defeat and despair in which we live.
No one is allowed to surpass the mercy, kindness, and good treatment of the Messenger of Allah and those after him.
Scholars, such as Ibn Qayyim, have been very strict in the ruling of congratulations and displaying the rites of different religions. Treat them with kindness and justice, and be clear with them, and invite them to Islam. Our greatest joy is the day when one of them declares the two testimonies to become our brother or sister in Allah.
You either congratulate them with a false compliment or with the claim of mercy and good treatment.
If you show mercy to them, then you must invite them to what brings their happiness in this world and the Hereafter, and do not deceive them with your congratulations, which mean: (Stay as you are, congratulations to you) You have wronged them by neglecting their invitation, and then you wrong them by deceiving them. Rather, adhere to the command of your Lord, the Most Exalted, when He commands you to invite them to the word that all the prophets and messengers have agreed upon, which is the unity of Allah and the abandonment of polytheism, the word of Islam: (Say, "O People of the Scripture, come to a word that is equitable between us and you - that we will not worship except Allah and not associate anything with Him and not take one another as lords instead of Allah." But if they turn away, then say, "Bear witness that we are Muslims").