What to prepare for with introduction of JMHZ (part 3): sports and healthcare employee benefits

You can read the previous two articles here (What to prepare for with introduction of JMHZ: employee benefit reporting) and here (Pre-school and school fees as employee benefits).
 

Sports equipment at workplace

Employers often make the working environment more pleasant for their employees by allowing them to use various exercise equipment free of charge directly at the workplace or by offering them the opportunity to participate in free exercise classes.

In its Methodological Information on the Taxation of Employee Benefits from January 2024, the GFD confirms that, under certain conditions, this benefit can be considered creating and maintaining working conditions for the performance of work. In such circumstances, the provision of these benefits to employees is not subject to personal income tax on the employee’s part and is deductible for income tax purposes on the employer’s part.

The main condition for this treatment is the purpose for which the employer purchased the sports equipment and the time link between its use and the performance of work: the aim should be to enable the use of sports facilities during working hours or immediately before or after work, e.g., to reduce stress at the workplace, increase work efficiency, or promote team spirit.

According to the GFD, this must be only a few exercise machines or pieces of sports equipment, not a full substitute for commercial services such as a fully equipped gym or comprehensive exercise courses; if that were the case, such benefit would then fall within the exemption limit for leisure-related benefits of half the average wage. The valuation of participation in group exercise classes shall be governed by general valuation rules: the benefit shall be included in the exemption limit at the usual price for attending such a class at a given place and time regardless of the actual costs incurred by the employer.
 

Other sports services and events

Other typical sports-related benefits include contributions to MultiSport cards, tickets to sporting events or sports facilities, and sports season tickets, both for employees and for their family members. In the case of family members, the sports-related benefit may also include, e.g., non-financial contributions to children's camps.

From the employee's point of view, all the above non-financial benefits are classified as leisure-related benefits that may be exempt from income tax up to a total limit of half the average annual wage. On the employer's part, these are non-deductible expenses. Expenses above the exemption limit can only be considered deductible if the employee's or their family members' entitlement to the benefit arises from a collective agreement, the employer's internal regulations, an employment contract, or another contract.

Separate rules apply to events with a sporting element organised directly by the employer, such as an annual sports day or company matches. If such events meet the criterion of a limited group of participants (according to the GFD’s interpretation, these must be employees, their family members, and business partners) and the form and scope of the event are reasonable (in terms of its venue, regularity, etc.), the employee's free participation in such an event is exempt from income tax. It is important to note that even though these are events with a sporting element, participation in them is not included in the above exemption limit for leisure-related benefits. The GFD has also confirmed that in the case of these events, refreshments or small gifts provided during the event are also tax-exempt on the part of the employee. The same applies to benefits provided to the employee's family members.
However, all related expenses are tax non-deductible for the employer.
 

Healthcare services and goods

A legislative change effective from 1 January 2025 has expanded the options of advantageous tax treatment of health-related employee benefits. Non-financial benefits consisting of the purchase of goods or services of a health, medical, hygienic, or similar nature from healthcare facilities, or the purchase of medical devices on prescription, have been classified into a separate category with an exemption limit of up to the average wage for the calendar year.

In practice, we often encounter benefit cards that can be used to pay for both healthcare and other leisure-related benefits. It is important that the value provided by the employer is broken down according to the purpose of the benefit points. In this regard, it is necessary for benefit companies to cooperate by informing employers about the purpose of the benefit points used and, where applicable, about the provider of the services.

Employees can thus take advantage of, e.g., above-standard health programmes at private clinics, non-covered vaccinations (e.g., against influenza), or vitamin packages. Employers can also pay for various health examinations and checks, psychological consultations, or therapies.

An important condition for the exemption is that the goods or services must be provided by a healthcare facility. The GFD confirms that a healthcare facility is a provider listed in the National Register of Healthcare Providers. If a voucher for a therapeutic massage is provided by an entity that is not listed in the register, it constitutes a taxable benefit for the employee. The condition of being a registered provider does not need to be met for prescription-based purchases of medical devices, whereby prescriptions may also be issued for goods such as prescription glasses or medical footwear.

For some universally available benefits, such as anonymous psychological helplines or online therapy, the GFD states that this is generally not a matter of creating and maintaining working conditions but rather a benefit for the employee. According to the GFD, the mere possibility of using the service is a benefit and therefore must be subject to additional tax (if it does not meet the definition of a health-related benefit or is provided above the exemption limit) or must be included in the exemption limit for each employee. Exceptions apply if the employer can prove who actually used the services or if the employer is able to prove that the employee refused to use the benefit.

On employers’ part, standard tax deductibility rules apply: benefits exempt from income tax for employees are non-deductible expenses for employers, and expenses incurred for benefits that employees are entitled to and that exceed the exemption limit can be claimed as deductible for income tax purposes. The same applies to benefits that do not meet the definition of health-related benefits (i.e., are not provided by a healthcare facility), but only if the employer is able to prove that these are expenses related to working and social conditions and employee health care.

Finally, we would like to draw your attention to the issue of commercial (or other than mandatory public) health insurance paid by the employer for employees or their family members. Such insurance does not meet the definition of the purchase of health services and will therefore always be taxable income for the employee that is also subject to mandatory insurance contributions. On the employers’ part, these expenses can be claimed as deductible if the employee is entitled to this type of benefit.