2025 brings major changes to employee benefits. New legislation introduces separate limits for health and leisure-time benefits, requiring careful record-keeping from HR professionals and compliance with the set thresholds.
New benefit limits for 2025
As of 1 January 2025, the following annual limits apply for exempting employee benefits from income tax:
- Health benefits: Exempt up to the amount of the average wage, which for 2025 is CZK 46,557, i.e. approximately CZK 3,880 per month.
- Leisure-time benefits: Exempt up to half of the average wage, i.e. CZK 23,278.50 per year, corresponding to approximately CZK 1,940 per month.
These limits are set for the calendar year and apply to the period from 1 January to 31 December 2025.
What do the individual benefit categories include?
- Health benefits: Contributions toward healthcare, the purchase of prescription medical devices, or services provided by healthcare facilities.
- Leisure-time benefits: Contributions toward recreation, cultural and sporting events, educational activities, or care for preschool-age children.
The obligation to keep records of benefits and comply with the limits
For HR professionals, it is essential to ensure diligent record-keeping of the benefits provided and to monitor whether the set limits are being exceeded. Exceeding these thresholds could lead to tax obligations for both the employee and the employer.
Taxation of benefits when limits are exceeded
If the value of the benefits provided exceeds the set annual limits, the amount above the limit is subject to taxation as ordinary employee income. This means that this amount will be included in the employee’s gross wage and taxed at the standard income tax rate. In addition, social security and health insurance contributions apply to this amount. For employers, this means higher payroll costs, but also the option of including these expenses among tax-deductible costs.
Recommendations for HR departments
- Update internal guidelines: Adapt internal policies to the new legislative requirements and clearly define the categories and limits of benefits.
- Train employees: Inform employees about the changes to benefits so they are familiar with the new conditions and limits.
- Implement an effective record-keeping system: Introduce or update systems for tracking the benefits provided, allowing for easy monitoring of usage and compliance with the limits.
By following these steps, you will ensure not only compliance with current legislation but also the satisfaction and awareness of your employees when it comes to employee benefits.
Earned wage access - a benefit for both employees and the company
Advanto’s employee benefit, Earned wage access, allows employees to access the portion of their wages already earned before the standard payday. This type of benefit is different from traditional health or leisure-time benefits and is not subject to the tax limits set for those categories. Providing this benefit therefore falls outside the scope of the tax-exempt amounts and has no effect on the limits for other benefits.
What’s more, Earned wage access does not affect company cash flow. Funds are paid out to employees directly by Advanto. The employer then settles the amounts paid out as part of the standard payday. Advanto increases attractiveness for both current and prospective employees, without straining their budget or affecting the tax limits for other benefits. Get Earned wage access for your employees.
