Income Tax 2027: New Developments in Employee Benefits and Other Areas

• Leisure and social benefits: with the exception of recreation, these benefits will be exempt from tax for employees without a financial limit and will constitute a tax non-deductible expense for employers.
• Employer contributions towards recreation and holiday packages: these contributions will be exempt from tax for employees up to an annual limit of CZK 20,000 and will constitute a tax non-deductible expense for employers.
• Social services: leisure benefits will also include non-monetary benefits provided by an employer to an employee or a member of the employee’s family in the form of contributions towards personal assistance, domiciliary care, respite care and other services. The services must be community-based and provided under an authorisation issued pursuant to the legislation governing social services. These benefits will be exempt from tax for employees without a financial limit and will constitute a tax non-deductible expense for employers.
• Employee healthcare: selected healthcare benefits paid by the employer, such as enhanced preventive examinations, selected screening programmes, certain vaccinations and related diagnostic procedures, will not be treated as employment income for the employee and will constitute a tax-deductible expense for the employer, provided that the statutory conditions are met. The benefits must be provided by a healthcare services provider and be listed in the annex to the Income Taxes Act.
• Healthcare benefits: healthcare benefits other than the selected benefits described above and paid by the employer will be exempt from tax for employees up to 100% of the average wage (CZK 51,663 in 2027).

Other Changes

• Return of the student tax credit: the annual tax credit of CZK 4,020 is to be reintroduced for students up to the age of 26, or up to the age of 28 in the case of full-time doctoral studies.
• Return of the childcare placement tax credit: demonstrable expenses incurred for placing a dependent child in a preschool facility may once again be deducted directly from the tax liability, up to the amount of the minimum wage for each child. The legislation also newly addresses situations in which a child lives in more than one jointly managed household.
• Return of still wine: the prohibition on the tax deductibility of gifts will once again include an exception for still wine. All other conditions applicable to advertising or promotional items will continue to apply.
• Higher threshold for the mandatory filing of personal income tax returns: the general threshold for taxable income is to increase from CZK 50,000 to CZK 100,000. For employees with additional income under Sections 7 to 10 of the Income Taxes Act, the threshold will increase from CZK 20,000 to CZK 40,000.