On 7 October 2026, Act No. 180/2026 Coll., on Sales Registration and on Amendments to Certain Other Acts, was promulgated in the Collection of Laws.¹ Although its main focus is the new sales registration system, it also introduces significant amendments to the Income Taxes Act which will affect employee benefits as of 1 January 2027.
The new legislation does not introduce a blanket removal of financial caps on all employee benefits. Different categories of benefits will be subject to different rules as of 2027. While the general financial cap will be abolished for selected leisure benefits, recreational stays and package tours will be subject to a separate cap, and new rules will be introduced for the tax treatment of selected social services and preventive healthcare. The differences concern not only the conditions applicable to employees, but, in certain cases, also the tax treatment of the related expenses incurred by employers.
Unfortunately, the adopted amendment also illustrates how the rules governing the tax treatment of employee benefits have undergone relatively frequent changes in recent years, which may increase uncertainty for employers when setting up benefit programmes on a long-term basis.
Leisure Benefits Without a General Financial Cap
The most visible and widely discussed change is the abolition of the current aggregate cap equal to one half of the average wage per tax period for the exemption of selected non-cash leisure benefits under Section 6(9)(d)(2) of the Income Taxes Act.
The legislature justifies the abolition of the cap primarily by the significant social nature of these benefits, which are provided in addition to employees’ wage and salary entitlements and are intended to support employee motivation, their relationship with their employer, and their mental and physical health or, where applicable, the health of their family members. To a certain extent, the amendment therefore returns to the rules applicable before 1 January 2024, when no general cap applied to this category of benefits.
This category will continue to include, in particular, the use of educational or recreational facilities, childcare facilities for pre-school children, including kindergartens, employer libraries, and physical education and sports facilities.
Participation in social events organised by the employer for a limited group of participants, including events with a cultural or sporting element, will newly fall within this provision as well (e.g. Christmas parties or company anniversary celebrations). Contributions towards cultural and sporting events and contributions towards printed books meeting the statutory requirements will also fall within this category.
The abolition of the financial cap does not, however, mean that these benefits will be exempt without further conditions. They must continue to constitute non-cash benefits which are not wages, salaries, remuneration or compensation for loss of income, and the statutory conditions governing their provision must be complied with, for example by financing them from the Fund for Cultural and Social Needs, a social fund, after-tax profit or non-tax-deductible expenses.
The abolition of the cap also does not permit a so-called salary swap, i.e. replacing ordinary remuneration for work with tax-advantaged benefits.
Recreational Stays and Package Tours Subject to a Separate CZK 20,000 Cap
The provision of a recreational stay or package tour will newly be separated from other leisure benefits. Under the new Section 6(9)(d)(3) of the Income Taxes Act, such benefits will be exempt separately up to an aggregate amount of CZK 20,000 per tax period. This is one aggregate cap for the entire tax period rather than a separate cap for each individual stay. Relevant benefits provided to an employee’s family members will also count towards this cap.
Any amount exceeding the CZK 20,000 cap will no longer be exempt and will constitute taxable income of the employee. Employers will therefore need to record recreational stays and package tours separately from other leisure benefits, for which the general financial cap is being abolished. Correct classification of a particular benefit will therefore be important, especially when distinguishing between the use of a recreational facility, which remains within the uncapped category, and the provision of a recreational stay or package tour, which is subject to the separate cap. In practice, the distinction may not always be entirely clear and will depend on the specific nature and manner in which the particular benefit is provided.
Customary and Proportionate Nature of Employer-Organised Social Events and Other Cultural and Sporting Events
As part of the consolidation of the rules governing leisure benefits, the existing rules concerning the participation of an employee or their family member in social events organised by the employer for a limited group of participants, including events with a cultural or sporting element, will also be moved to Section 6(9)(d)(2) of the Income Taxes Act. These rules are currently contained separately in Section 6(9)(g) of the Income Taxes Act.
As regards employer-organised social events themselves, this does not represent a substantive change. Their exemption was not subject to a financial cap under the existing rules either, and the transfer is primarily intended to improve the clarity and systematic structure of the legislation.
For employer-organised social events and contributions towards cultural or sporting events to qualify for the exemption, it will be decisive whether, having regard to the nature of the benefit, its provision is customary for the employer and its form and scope are proportionate.
While this condition already applied to social events, as of 2027 the Act expressly introduces it for contributions towards cultural and sporting events as well, with the aim of preserving the social nature of these benefits while preventing excessive benefits and their misuse for undesirable tax optimisation.
New Exemption for Contributions towards Selected Social Services
A completely new category consists of non-cash contributions provided to an employee or their family member towards selected social services. The exemption will apply to personal assistance, care services, emergency care, respite services, early intervention, day service centres and day care centres. However, the Act requires these to be community-based services provided on the basis of an authorisation under the Social Services Act.
The new rules are intended primarily to support services enabling persons in need of assistance to remain in their natural home environment and, at the same time, to assist employees caring for their relatives, typically elderly family members. They also respond to the long-term underfunding of social services and are intended to encourage greater involvement of employers in the care system. The tax advantage therefore primarily targets outreach and, to some extent, outpatient services rather than all forms of care in general. For example, the exemption does not apply to assistance provided by a close person or by a social care assistant who does not carry out such activity as a business.
Selected Preventive Healthcare Without a Financial Cap
The final wording of the Act introduced another significant change. A new letter (f) is added to Section 6(7) of the Income Taxes Act, under which a benefit provided by an employer as part of employee healthcare to the extent specified in the new Annex 4 to the Income Taxes Act will not be treated as income from dependent activities. The selected benefits will therefore be assessed separately from exempt healthcare benefits and will not count towards their existing cap.
Annex 4 includes, in particular, enhanced preventive medical examinations, diabetes screening for at-risk groups, cardiovascular risk examinations, cancer screening procedures (e.g. mammography, colonoscopy, dermatological examinations or gynaecological screening) and selected vaccinations requested by the employee, in each case provided by a healthcare provider. Related laboratory analyses and diagnostic imaging are also included. Travel vaccinations, as well as regular, special and extraordinary vaccinations under the applicable legislation, are excluded from this new category.
The new rules are narrowly defined and apply only to healthcare provided to the employee and only to services listed in Annex 4 to the Income Taxes Act. They do not apply to the employee’s family members. Other healthcare, medical, hygiene-related and similar non-cash benefits will continue to be assessed under Section 6(9)(d)(1) of the Income Taxes Act.
Employer Tax-Deductible Expenses and Social Security and Health Insurance Contributions
For employers, it is important to note that a broader exemption on the employee’s side does not automatically result in broader tax deductibility of the related expenses. Section 25(1)(h) of the Income Taxes Act continues to exclude selected non-cash benefits from tax-deductible expenses where such benefits are exempt from tax on the employee’s side. The amendment extends this rule to the newly introduced contributions towards selected social services.
However, this rule does not apply without exception to all exempt benefits. Separate rules apply, for example, to costs associated with the operation of childcare facilities for pre-school children or contributions towards their operation. For other selected leisure benefits, recreational stays and package tours, social events and contributions towards social services will generally constitute a non-tax-deductible expense for the employer. If, on the other hand, a particular benefit or part thereof does not meet the conditions for exemption and is taxed on the employee’s side, the restriction under Section 25(1)(h) will not apply to that portion. Its tax deductibility must then be assessed under the other provisions of the Income Taxes Act, in particular with regard to the manner in which the employee’s entitlement to the benefit is established.
The new selected preventive healthcare under Section 6(7)(f) of the Income Taxes Act is structured differently, as it will not constitute taxable income of the employee. The tax deductibility of these benefits on the employer’s side may be based in particular on Section 24(2)(j)(4) of the Income Taxes Act, provided that the employee’s right to the benefit arises from a collective agreement, an internal regulation, an employment agreement or another agreement.
The tax treatment of employee benefits is also reflected in social security and health insurance contributions. The assessment base for social security and health insurance generally follows income from dependent activities which is subject to personal income tax and is not exempt from such tax. Exempt benefits and selected preventive healthcare which is not subject to tax therefore generally do not form part of the assessment base. However, if, for example, the portion of a recreational benefit exceeding the applicable cap becomes taxable income of the employee, that portion will also be reflected in the relevant social security and health insurance contributions.
What Should Employers Review Before 1 January 2027?
In practice, not only the value of individual benefits, but primarily their correct classification and the manner in which they are provided will be important. Employers should therefore review their benefit programmes, internal regulations and, where relevant, the settings of their benefit platforms by the end of 2026 so that it is clear how each benefit is treated for tax purposes and under what conditions it is provided to employees.
Particular attention should also be paid to maintaining the non-cash form of benefits under Section 6(9)(d) of the Income Taxes Act. It is not sufficient merely to determine the correct purpose of the benefit; the manner in which it is provided is equally important. In particular, the straightforward reimbursement of an expense first paid by the employee will generally not satisfy the requirement for a non-cash benefit. In the case of the new preventive healthcare benefits, employers will need to verify whether the particular healthcare service actually falls within the exhaustive list set out in Annex 4.
The Act also contains a specific transitional provision for non-cash benefits under Section 6(9)(d) of the Income Taxes Act: the new rules will apply to the relevant non-cash benefits provided as of 1 January 2027, irrespective of the employer’s tax period. The decisive factor will therefore be the date on which the particular benefit is provided.
Conclusion
The changes effective as of 1 January 2027 represent a relatively significant intervention in the existing system of employee benefits. The most notable changes are the abolition of the general financial cap for selected leisure benefits and the introduction of new rules for preventive healthcare, while separate caps and conditions remain applicable to other categories of benefits.
For employers, the value of the benefit will therefore not be the only relevant factor. Increasing importance will also attach to its correct classification, the manner in which it is provided and the corresponding employment-law arrangements. Correctly distinguishing between the individual categories will be relevant both for the employee’s tax treatment and for the tax deductibility of expenses and the related social security and health insurance contributions on the employer’s side. The new rules therefore give employers broader possibilities when designing employee benefit programmes, while at the same time requiring those programmes to comply with the specific conditions applicable to each category of benefit.
Mgr. Miroslav Nerad, Attorney – nerad@plegal.cz
Natálie Grospičová, Legal Assistant – grospicova@plegal.cz
12. 11. 2026