Business car for private purposes
The amount of in-kind benefit is set based on the acquisition price of the car (eventually increased by technical improvement of the car) and amortization of a car.
This in-kind benefit is considered as an employee’s taxable income during eight consecutive calendar years from the beginning of car put into use in the amount of 1%:
The employee’s income tax is applied for each calendar month during which the employee has a right to use the vehicle for private purposes. It is not decisive whether the car was used for private purposes in a given month. These provisions on taxation are relevant with respect to employer's own car as well as the rented one.
The costs related to the use of the car by the employee for private purposes are tax deductible expense in the amount of 100% for the employer if the use of the vehicle is agreed with the employee in an employment or other similar agreement and is subject to income tax on the employee‘s side under the conditions mentioned above.
The provision of car for private purposes is not subject to employee’s income tax after the period of eight years is lapsed. In such case, the employer will include the expenses related to the usage of company’s car for private purposes in the tax-deductible expenses in an actual demonstrable amount corresponding to the usage of vehicle for business purposes or in the form of lump-sum expenses of 80% of total car related costs.
Employers use fringe benefits to motivate employees to perform better as well as to differ themselves from the competitors. What does the provision of various fringe benefits mean for the employer and employee in terms of taxes? What changes are coming into force in 2022 in fringe benefits?
As one of fringe benefits, the employers often contribute to employees on meals in the higher amount than minimum limit set by the Labour Code, or meal vouchers are fully reimbursed by the employer.
When using electronic devices for private purposes, the employer may assert some of the related expenses.
How and when to apply tax expenses when training employees?
How and when to apply tax expenses when accommodating employees?
Similarly, as for accommodation, a transport to/from the place of work can be tax exempt fringe benefit for the employee.
What are the taxation conditions for employers who provide recreation vouchers?
The benefits provided from the social fund represent a taxable income for employees.
Employers may provide various other types of fringe benefits.
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