Must employees in the Czech Republic pay taxes on a benefit provided by their employer in the form of vaccination against the flu?

Flu vaccination as a non-deductible expense on the part of the employer and – potentially taxable – income on the part of the employee must be carefully reviewed under several aspects.

If an employer decides to grant its employees a fringe benefit in the form of premium healthcare, by covering the costs for a flu shot, then the associated expenses are a non-deductible cost item on the part of the employer. On the part of the employee, two scenarios are possible in terms of how the benefit may be treated under taxation aspects.

If the healthcare provider charges the costs of administering the vaccine directly from the employer, then the employer incurs a non-deductible expense within the meaning of Sec. 25 (1) (h) (2) of the Income Tax Act (Act No. 586/1992 Coll.), whereas the employees are being provided with a non-cash benefit that represents tax-exempt income (as per Sec. 6 (9) (d) of the Income Tax Act; this income is also exempt from withholdings for social security and health insurance contributions.

Conversely, if the employer were to refund the payment for the flu shot directly to its employees, then this would constitute a cash contribution toward healthcare, which is taxable income and as such forms a part of the assessment base for wage tax, social security contributions, and health insurance payments.

Income Tax Act (Act No. 586/1992 Coll.)

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