Healthcare and (non-financial) leisure time benefits in a value of up to CZK 46,557 or CZK 23,278, respectively, are now exempt from income tax on the part of the employee. Read on to find out the terms on which such benefits may be drawn.
As of 01 January 2025, changes have been made in the Czech Republic in the area of employee benefits, which concern in particular the setting of tax limits for health and leisure benefits rendered in kind as opposed to cash. The aim of these changes is to promote employee health and modernize the employee benefit system.
A separate annual limit for health benefits has been newly introduced, which corresponds to the average wage, i.e. CZK 46,557 for 2025. This category includes, for example, reimbursements for medical services, medical procedures, hygiene aids or medical devices prescribed by a doctor.
For example, an employee may use the benefit to pay for an annual subscription to a private clinic where he or she regularly attends preventative health check-ups and physical therapy. Let’s suppose the premium health care package costs CZK 20,000 annually. The employer will cover this amount as a tax-deductible benefit. In addition, the employee will use another CZK 10,000 for regular psychological consultations and the rest of the limit for flu vaccinations and vitamin supplements. In total, the employee will therefore use the entire allocated budget of CZK 46,557 for health benefits without any tax burden.
The health benefit can also be used for the purchase of prescription drugs or dioptric corrections. Payment can be made by way of a benefit card at contractual partners such as pharmacies or opticians, or one may use a reimbursement scheme – the employee purchases the medication or glasses and then submits the receipt to the employer, who reimburses the cost. Another option is for the employer to work with specific providers who will allow direct use of the benefit without the need to pay upfront.
For leisure-time benefits, such as contributions to sports or cultural activities, recreational stays or educational courses, an annual limit of half the average wage has been set, i.e. CZK 23,278. Employers can thus continue to provide these benefits without tax obligations on the part of the employee.
A separate limit for health benefits was introduced to facilitate employees’ access to necessary health care and prevention, which responds to the growing emphasis on physical and mental health. Increasing the limit for leisure benefits promotes a healthy work-life balance and encourages employees to be active in their leisure time.
In terms of the tax treatment, this is a non-tax expense on the employer’s side, which means that this expense cannot be used to reduce the tax base. For employees, these benefits are not subject to income tax or social and health insurance contributions up to the average wage limit.
Source: Income Tax Act (Act No. 586/1992 Coll.)
