Company nursery as a benefit from a tax perspective

If it is indeed a non-monetary benefit, it has so far been the case that it is not reflected in the employee's salary. Thus, the employee only benefits from the benefit, but does not pay income tax or social and health insurance contributions on it.

Restriction of non-cash benefits by the consolidation package

With the approval of the consolidation package, however, comes a limitation on the amount up to which non-cash benefits can be drawn under the tax exemption. The new annual limit is set at half of the average wage.

For 2024, non-monetary benefits, including company nurseries, will be tax exempt up to a maximum of CZK 21,983 per year. We are talking about an amount of CZK 1,832 per month.

If employees use more than the total value of these benefits during the year, everything above CZK 21,983 will enter their income. The difference will have to be taxed and social security and health insurance will have to be paid on it.

Valuation of the company nursery from a tax perspective

So how do we correctly value a company nursery so that we can calculate whether or not the employee will pay anything extra for using it?

If you have ever chosen a nursery for your child, you will have come across the abysmal difference between the prices of public and private nurseries.

Corporate nurseries tend to be more like private ones - there are fewer children or a larger number of childminders per group of children. They also accept children under 3 years of age or offer extra tuition, for example in English. Therefore, there is naturally a concern that, for tax purposes, monthly costs in the thousands will be counted, and thus easily exceed the aforementioned limit of CZK 21 983 per year.

Fortunately, the Ministry of Finance has already prepared an explanatory methodology according to which only the fees in state-run kindergartens in the relevant locality will be relevant.

What to watch out for

At the beginning of this article, we listed other types of non-cash benefits that count towards the same annual limit as company nursery fees.

So if an employee draws, for example, an allowance for an off-site language course or a sports season ticket for themselves and also uses a company nursery, the total may exceed the new limit set by the consolidation package.

All non-cash benefits exceeding CZK 1,832 per month, or CZK 21,983 in total per year, will thus enter his income and the employer will pay income tax and social and health insurance on them. The amount of the net pay will thus change as the benefits are drawn.

The consolidation tax package also abolishes the popular tax deduction for school fees.

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