According to § 19 par. 1 of the Income Tax Act (ITA), it is possible to apply expenses that limit special regulations (e.g. the Labour Code and the Road Compensation Act) to tax deductible  expenses only within the limit set out there, except the cases, where:

• the higher claims are agreed by internal regulation or in a contract concluded between the employee and the employer in accordance with the provisions of the Labour Code (LC), and
• these higher claims are taxable income on a part of the employee according to § 5 par. 1 and par. 3 letter d) ITA.

Section 152 of the Labor Code (ZP), as amended by subsequent regulations, stipulates the employer’s obligation to provide meals for employees. The employer is obliged to provide its employees in all shifts with meals that meet the principles of proper nutrition, in particular by providing one hot main meal, including a suitable drink, during the working shift, directly at the workplace or in its vicinity.

Tax Exemption for Meals

From the employee’s point of view, the following are exempt from tax in accordance with Section 5 (7) (b) of the Income Tax Act (ZDP):

• The value of meals provided by the employer to the employee in non-cash form for consumption at the workplace or as part of meals provided through other entities pursuant to Section 152 of the Labor Code,
• Financial contribution to meals provided by the employer to the employee pursuant to Section 152 of the Labor Code.

It follows from the above that the following meal allowances are exempt for the employee:

• Employer’s contribution only up to 55% of the meal allowance provided for a business trip lasting 5 to 12 hours according to the current measure of the Ministry of Labor, Social Affairs and the Family of the Slovak Republic,
• Meal allowance from the social fund, which is not limited.

Note: Tax exemption cannot be applied to the value of meals that the employer provides to the employee after the working shift and outside the workplace, e.g., hot meals provided after working hours during company parties, teambuilding events, sports games, etc.

Example: The employer organized a company event on the occasion of the 15th anniversary of the company’s foundation, which took place after working hours in rented hotel premises. The employer provided dinner and refreshments for the employees, which were financed from the social fund. Since tax exemption in accordance with Section 5 (7) (b) and (c) of the Income Tax Act can only be applied to consumption at the workplace, the value of food and drinks served to employees represents taxable income for employees pursuant to Section 5 (1) (f) and (3) (d) of the Income Tax Act.

From the employer’s point of view, meal allowances are a recognized tax deduction if they are provided in accordance with Section 152 of the Labor Code. If the employer decides to provide meal allowances to employees in excess of the provisions of Section 152 of the Labor Code, it may claim meal expenses for employees as tax deductible expenses on the condition that the excess amount is taxed to the employee as an employee benefit.

Employer expenses for accommodation for employees in an employment relationship (§ 42 of the Labor Code (ZP)) in buildings classified under codes 112 and 113 of the Classification of Buildings Ordinance of the Statistical Office of the Slovak Republic No. 323/2010 Z.z. are also tax deductible expenses, if the employer’s main activity is production carried out in a multi-shift operation. These codes include two-family and multi-family buildings. To apply the new tax exemption amount, it is sufficient that it is a non-cash benefit provided to an employee in an employment relationship by the employer for the purpose of providing accommodation for the employee in a total amount of up to EUR 100 per month, and for an employee whose employment relationship with this employer lasts continuously for at least 24 months, in a total amount of up to EUR 350 per month, which is determined in proportion to the number of days in which the employee’s accommodation was provided in the respective calendar month.

If the taxpayer does not meet the conditions set out in § 19 (2) (s) of the Income Tax Act (ZDP), it is possible to recognize these expenses (costs) for tax purposes if they are provided as an employee benefit => they will represent taxable income for the employee and the said benefit will be agreed upon in the employment contract, collective agreement or internal regulation of the employer.

Example: An employer whose main activity is production in a multi-shift operation provides accommodation to employees in an employment relationship in a workers’ hostel. Since it is accommodation in a building classified under code 113 of the Classification of Buildings, the expenses for the provision of accommodation for employees are fully tax deductible for the employer. The value of the non-cash benefit for one accommodated employee is EUR 520 per month. If the employee has been in an uninterrupted employment relationship at the time of the provision of the benefit for at least 24 months, the amount of the non-cash benefit of EUR 350 will be exempt from tax and the amount of EUR 170 will be taxable non-cash income of the employee.

Income provided in the form of non-cash benefits for the purpose of ensuring employee transportation to and from the workplace in accordance with Section 19 (2) (s) point 1 of the Income Tax Act (ZDP) is exempt from tax on the employee’s side in a total amount of up to EUR 60 per month. If the non-cash benefit calculated from the employer’s demonstrably expended funds recalculated per seat in a motor vehicle exceeds the amount of EUR 60, only the benefit in excess of this amount is included in the tax base.

According to this provision, tax deductible expenses, which can be claimed only to the extent and under the conditions specified in the Income Tax Act, are employer’s expenses for employee transportation to and from the workplace on the grounds that public transport is demonstrably not carried out at all or to the extent corresponding to the needs of the employer and the employer uses motor vehicles classified under code 29.10.3 of the Classification of Products for this purpose.

It follows from the above that if the employer provides transportation for employees to and from work even though the transportation is provided by a public regular transport provider that meets the needs of the employer, or the employer uses motor vehicles classified under a code of product classification other than 29.10.3 for this purpose, then it is not transportation according to Section 19 (2) (s) of the Income Tax Act and it is not possible to apply the tax exemption in accordance with Section 5 (7) (m) of the Income Tax Act in this case. In such a case, the non-cash benefit provided to the employee is taxed without applying the exemption and the amount of the non-cash benefit is determined in accordance with Section 2 (c) of the Income Tax Act, e.g., in the amount of the fare that the employee would pay in public transport.

The employer may (but is not obliged to) provide such a contribution to an employee whose employment relationship with the employer has lasted continuously for at least 24 months, upon the employee’s request for a contribution to recreation in the amount of 55% of the deductible expenses, up to a maximum of EUR 275 per calendar year in total for all the employee’s children. The employer assesses the fulfillment of this condition as of the date of commencement of the period to which the document issued by the sports organization relates.

Tax exemption cannot be applied to the contribution if the employer provides the contribution to the employee on the basis of a document that is not issued by an authorized person, i.e., is not issued by a sports organization (PO) registered in the Sports Information System, for which the child performs sports, as well as if the document does not contain the child’s identification data or the period. The employer is obliged to verify whether the child is a person belonging to the sports organization according to a special regulation for at least six months. As far as parents are concerned, the Labor Code does not specify the provision of the contribution only for one of the parents, therefore, after fulfilling the specified conditions, both parents may claim the contribution for the same child (e.g., for another period of the child’s performance of the same sports activity).

Employers who employ more than 49 employees are obliged to provide an employee whose employment relationship has lasted continuously for at least 24 months, upon the employee’s request, a contribution to recreation in the amount of 55% of eligible expenses, up to a maximum of EUR 275 per calendar year. If the employee has more employers, he/she may request a contribution to recreation from only one employer for a calendar year. In the case of an employment relationship for a shorter working time, the maximum amount of the contribution to recreation for a calendar year is reduced in proportion to the shorter working time.

An employer with exactly 49 or fewer employees may, but is not obliged to, provide a contribution to recreation to its employees. If the employer provides a contribution, it does so under the same conditions and to the same extent as an employer with more than 49 employees.

From the employee’s point of view, contributions to recreation that are provided to the employee by his/her employer are exempt from income tax (the employee receives the contribution as “net income”), regardless of whether the employer was or was not obliged to provide this contribution upon the employee’s request.

As far as the employer is concerned, the contribution to recreation provided to the extent and under the conditions specified in § 152a of the Labor Code is a tax deductible expense of the employer in accordance with § 19 (2) (c) point 5 of the Income Tax Act.

The employer may provide employees with access to a recreational, pre-school, healthcare, educational, physical education or sports facility owned or leased by the employer, while on the employee’s side this non-cash income in the form of use of the facility provided by the employer to the employee will be exempt from tax. The same applies to such benefits provided to the employee’s spouse and children, who for the purposes of this Act are considered dependents of such employee or his/her spouse.

In this context, however, it is not possible to recognize the purchase of services and recreational vouchers as the provision of a service through a travel agency, but it is possible to recognize, for example, the rental of tennis courts or the rental of part of a recreational facility, etc. Likewise, it is not possible to recognize the provision of financial resources. Example: The employer entered into an agreement with a fitness center that between 3:00 p.m. and 6:00 p.m. each week, the fitness center will only be available to the employer’s employees. On the employee’s side, the use of the fitness center is a non-cash income exempt from tax in full.

Income of an individual from the acquisition of non-cash income in the form of employee shares or business interests is also one of the benefits through which employees can be motivated. Since 2024, non-cash benefits acquired by an employee in the form of employee shares or a business interest in connection with the performance of dependent work performed for the employer whose shares or business interest he/she has acquired are exempt from tax, if:

• the employer has not yet paid dividends from the profit of the business company and
• its shares have not been admitted to trading on a regulated market or a similar foreign regulated market.

This means that if an employee acquires so-called ESOP of another company, e.g., a foreign parent company, other than the one for which he/she works, the tax exemption cannot be applied.