Act on electronic reporting of sales passed by the Chamber of Deputies, with changes to income tax and employee benefits
As part of its debate on the draft Act on the Electronic Reporting of Sales, the Chamber of Deputies has also approved several legislative amendments in the area of income tax. The bill will now be considered by the Senate.
We reported on the proposed legislative package here. Although the main objective of the amendment is to reintroduce electronic reporting of sales, the amendments submitted as part of Parliamentary Print No. 189 also include significant changes in the area of income tax. These focus mainly on employee benefits and the thresholds triggering the obligation for individuals to file a tax return. They also clarify certain specific tax rules.
Tax relief for employees
One of the most significant changes concerns the tax treatment of health-related employee benefits. The new Annex 4 lists supplies that will not be subject to income tax. These include preventive healthcare services paid for by the employer, such as preventive medical check-ups, selected screening examinations or certain vaccinations, which are defined in the proposed annex by reference to the CZ-NACE classification. This treatment, however, will not apply, for example, to aesthetic procedures in the area of plastic surgery, cosmetic services or medical procedures without appropriate professional substantiation.
Obligation to file a tax return
The amendment proposes to increase the threshold for the obligation to file a personal income tax return from the current CZK 50,000 to CZK 100,000.
The threshold for filing the tax return should also increase where the individual has other income under Sections 7 to 10 of the Income Tax Act, in addition to income from employment with one or more consecutive employers where they have signed taxpayer’s declaration: here, the threshold should increase from the current CZK 20,000 to CZK 40,000.
Clarification on the “payer of income” in the context of tips in catering services
In connection with the exemption of voluntary tips in catering services, it is expressly provided that the employer for whom the tipped employee performs work is deemed to be the payer of this income.
Still wine as a tax-deductible promotional item
Under the new rules, it will be possible to treat a promotional item in the form of still wine as a tax-deductible expense, provided that the statutory conditions are met: its value shall not exceed CZK 500 excluding VAT, and it shall be marked with the name or trademark of the provider or with the name of the promoted goods or services. The new rules will not apply to other promotional items subject to excise duty.