The Supreme Administrative Court judged what is considered a non-monetary payment in the form of the use of healthcare, educational or recreational establishments, or contributions for cultural or sports events. In its decision, the court deviated from the opinion of the regional court and stated that, in order to fulfil the conditions of income exempt from personal income tax, the Income Taxes Act defines that it has to be a non-monetary payment.
In its judgement ref.no. 29 Af 89/2018-68 from December 2021, the regional court stated that, in order to fulfil the conditions of a tax-exempt employee income, non-monetary payment from the employer for the benefit of the employee may also be in such form that the employee pays for the relevant goods or services themselves and the employer provides them with earmarked funds either as an advance payment or against provably incurred expenses.
Now the view of the Supreme Administrative Court regarding the assessment of what is a non-monetary income differs from that of the regional court. In its judgement ref.no. 7 Ads 31/2021-28 from November 2022, it considered a situation when the employer paid money to an employee for the purpose of holiday based on the employee’s documented holiday expenses. In its judgement, the Supreme Administrative Court did not identify with the conclusion of the Regional Court in Brno, which, in light of previous case law of regional courts, assessed the provision of a monetary amount to an employee based on an invoice for holidays as a non-monetary income and thus the regional court recognised the provision of the monetary payment as income exempt from personal income tax.
The Supreme Administrative Court stated that the following can be considered non-monetary payment:
- the provision of vouchers, e.g. Flexipasses, for the use of services or other similar performance that are not convertible into money, or
- the situation when the employer provides an amount of money to a third person through an invoice in order to provide a certain benefit or service to an employee or their family member.
On the contrary, the Supreme Administrative Court did not agree that the employer could make direct payment on the employee’s account, since the fulfilment of the purpose, i.e. the use of money for holidays, is not guaranteed at the moment of payment, because the employee could use the funds for other things as well.
We shall see how the Supreme Administrative Court comments on the situation described in judgement ref.no. 29 Af 89/2018-68 from December 2021 in the future.
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