Recently, Czech companies have been grappling with the introduction of a limit on employee benefits. This change is part of the government’s consolidation package, initially set to eliminate tax advantages for employee benefits. However, after receiving a wave of criticism, the Ministry of Finance revised its stance. The benefits will remain tax-advantaged, but now with an imposed limit.
Next year, people should not tax benefits over 21,983 korunas, half the average wage pegged at 43,967 korunas. As a result, employees can expect monthly tax-exempt bonuses of up to 1832 korunas. Any amount beyond this limit will be taxed as income.
A survey revealed that two-thirds of companies offer flexible working hours, and 54% offer summer or Christmas bonuses. Other expected benefits include meal vouchers, the option to work from home, and training and pension savings contributions. Interestingly, the survey showed that most employers plan to introduce pension savings contributions next year.
However, some companies plan to limit gift vouchers, contributions to sports and culture, and even work-from-home options, which have significantly increased during the recent COVID-19 pandemic. This shift is mainly a concern for larger companies with collective agreements locked in for several years ahead, with benefits playing a significant role in these agreements.
Despite the changes, companies will logically prioritize those benefits that are either not at all or only slightly affected by tax changes. Most firms plan to make only minor adjustments to their benefits. For instance, they are adjusting the amount of meal allowance to comply with new legislation.
The employee benefits topic is also being discussed in public administration. The government plans to cut benefits for state employees by half, with 50% of the remaining money always destined for pension savings.