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When the employer thinks of pensions...

Andrea Kleinová
22/11/2018
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Meal vouchers, meal vouchers and… meal vouchers. Do not get us wrong, it is a great benefit from the employer and we like to use it daily too! What we are trying to say is that the employee benefits may be a bit different, let’s say, more responsible.


Many employers provide their employees with benefits for pension savings or life insurance. They are not only exempt from tax and for both sides thus cheaper than raising wages, but there is not insignificant support from the state too. Employer's contribution to this benefit is exempt from the employee up to a total of CZK 50,000 per year if all legal conditions are met. Special conditions are set for pension insurance (without state contribution) and so-called capital life insurance. Most importantly, it is stated in the contract of employment that the payment of performance is possible not earlier than 60 calendar months and not earlier than the age of 60 years of the insured. In the case of life insurance, the early withdrawal of savings should also not be allowed. It is necessary to emphasize that such a contribution in any amount is a tax deductible expense on the part of the employer if its provision is enshrined in an internal company law or in a contract with a particular employee.


But it is possible to motivate the employee himself to save money. If the employee contributes to retirement savings or life insurance by himself (the usual condition for earning a contribution from an employer), he has the opportunity to reduce the tax base. In both cases this year can deduct up to CZK 24,000. However, the amount needed to maximize the deductions for life insurance and pension savings is different. In the case of life insurance, it is enough to reimburse CZK 24,000 for the maximum deduction. For pension savings, however, the deductible amount is calculated as the total of contributions paid less the contributions to which the state contribution is due, which currently corresponds to CZK 12,000. For maximum deduction, it is necessary to save up to CZK 36,000 per year. The state provides a contribution only in the case of supplementary pension insurance. Even here, however, it is necessary to keep an eye on compliance with the statutory conditions. The amount of the state contribution depends on the amount that the employee saves from his sources. In order to claim the contribution, the amount of the monthly deposit must be at least CZK 300. The employee then receives 90 CZK from the state. The maximum amount of the state contribution is CZK 230 and can be obtained at a monthly deposit of at least CZK 1,000.

Author

Andrea Kleinová
Andrea Kleinová
Tax Manager
Crowe