Employee benefits in Slovakia in terms of taxes | eBook

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 expenses only within the limit set in this way, 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.

From 2022, non-monetary benefits provided to the employee in the total amount of a maximum of EUR 500 per tax periods from all employers will be exempt from tax, unless the ITA provides otherwise and the funds spent by employers on this non-monetary benefit are not used as expenses (costs) to achieve, secure and maintain taxable income.

The interdepartmental comment procedure included an amendment to the LC, which regulates the possibilities of providing a financial contribution instead of meal vouchers and, if approved, it will be effective from March 1, 2021. An employer, who will not provide meals in his own or another catering facility will be obliged to allow the employees to choose between providing meals through meal vouchers and a financial contribution for meals. The amount of the financial contribution for meals will be the amount that the employer contributes to the meals of other employees (at least 55% of the price of the meal, but not more than 55% of the meal provided for a business travel of 5 to 12 hours), but at least 55% of the minimum value of the meal voucher. The financial contribution will be exempt from tax.

Tax expenditures include employer´s expenses on employee accommodation for employees in employment (§ 42 LC) in buildings classified in the codes of Constructions Classification 112 and 113 according to Decree no. 323/2012, if the predominant activity of the employer is production performed in multi-shift operation. The mentioned codes include two-dwelling and multi-dwelling buildings. For the application of the new amount of the tax exemption, it is sufficient that it is a non-monetary benefit provided to an employee by an employer in order to provide accommodation for an employee in total amount of up to EUR 100 per month and for an employee whose employment with that employer lasts continuously for at least 24 months, in total amount of up to EUR 350 per month, determined in proportion to the number of days during which the accommodation was provided to the employee in the respective calendar month.

If the taxpayer doesn’t meet the conditions given in § 19 par. 2 letter s) ITA, it is possible that the expenses (costs) may be tax deductible in case that they will be provided as an employee benefit = > they will represent taxable income for the employee and this performance will be agreed in a contract.

Income provided in the form of a non-monetary benefit for the purpose of ensuring the transport of an employee to the place of work and back according to § 19 par. 2 letter s) ITA is exempt from tax in the amount of the difference between the amount of expenses demonstrably incurred by the employer (invoice including the VAT amount) and the amount paid by employees to the employer for the transport provided to the employee concerned. The exemption applies if the compensation from employees reaches at least 60%, respectively 30% in total, if the predominant activity of the employer is production carried out in a multi-shift operation and such a form of transport to the place of work is used by at least 30% of the total average registered number of employees. If the employees don’t contribute to the transport at all, such income must be taxed in full by the employee, as well as an allowance for transport by private motor vehicles.

From 2021, non-monetary benefit provided to an employee by an employer for the purpose of ensuring the transport of an employee in the total amount of maximum of EUR 60 per month. If the non-monetary benefit exceeds the amount of EUR 60, only the transaction in excess of the amount thus determined shall be included in the tax base (partial tax base).

An employer can (is not obliged) provide such an allowance to an employee whose employment with this employer lasts continuously at least 24 months. Fulfilment of this condition is assessed by the employer on the days of the beginning of the period covered by the document issued by a sport organisation.

The exemption can´t be applied to the allowance if the employer provides the benefit to the employee on the basis of a document which is not issued by an authorized person, i.e. it is not issued by a sport organisation (legal entity) registered in the Sport Information System for which the child is performing the sport, as well as if the document doesn’t contain the child´s identification data or a period. The employer is obliged to verify whether the child is a person belonging to a sport organisation according to a special regulation for at least six months. In case of parents, LC doesn’t stipulate the provision of the allowance only for one of the parents, therefore after fulfilling the conditions, both parents can claim the allowance for the same child (e.g. for another period of the same sport activity of the child).

One of the non-monetary benefits includes 13th salary that can be provided by an employer to an employee during summer months. It is a part of the salary and is thus considered when calculating the average earnings (must be at least EUR 500). If it is paid during June for May, it is possible to exempt it from tax. It is similar in the case of the 14th salary with the difference that it is paid in December for November and its amount represents at least the average monthly earnings of the employee according to the § 134 LC with the fact that the 13th salary was also paid for May.

13th salary, taxes and contributions in 2020 and 2021:

• tax-exempt income up to EUR 500,
• health insurance contributions are not paid up to the same amount,
• is a subject to the social security contributions,
• from 2021, the income should remain a subject to the social security contributions.

14th salary, taxes and contributions in 2020 and 2021:

• tax-exempt income up to EUR 500,
• health insurance contributions are not paid up to the same amount,
• is not a subject to the social security contributions up to EUR 500,
• from 2021, the income should be a subject to social security contributions.

An income of a natural person from the acquisition of new shares in the event of an increase in the registered capital from the retained earnings of a company based on the decision of the general meeting according to the § 208 Commercial Code  is not a subject to tax according to the § 3 par. 2 letter d) ITA. however, it is necessary to consider, from profit of which tax period the registered capital was increased, and whether a share of profit of a natural person would have been taxed, if it had been distributed and paid out.

An income from social fund of an employer is not a subject to tax, if it is provided to an employee for a preventive medical examination above the scope stipulated by special regulations.  A social assistance due to the death of a close person, mitigation of the consequences of a natural disaster or a temporary incapacity for work of an employee whose continuous duration exceeds a vast majority of the tax period (183 days) are also exempt from the tax.

From 2020, employee benefit for training of own employees is significantly expanded in § 5 par. 7 letter a) ITA, that is exempt income of the employee. Amounts paid by the employer for the employee for his education, qualification upgrade, trainings are exempt from tax – but only under a condition that the trainings, etc. are related to the subject of the employer´s activity.