Overview of new exemptions in taxation of individuals in 2018 and 2019
Several new exemptions or tax bonuses have been introduced in taxation of individuals for the years 2018 and 2019. As in many cases these changes were passed indirectly through amendments to other regulations, we prepared for you a summary of the most important ones.
For the year 2018, the following changes are to be kept in mind:
- Tax bonus with respect to mortgage interests: Subject to several conditions set out in Article 33a of the Income Tax Act, an individual can claim tax bonus with respect to mortgage interests in the amount of 50% from paid interests, max. EUR 400 per year.
- Spa care allowance: According to Article 11 Section 14 of the Income Tax Act, spa care allowance can be claimed with respect to paid spa care expenses of a taxpayer, his/her spouse and children up to EUR 50 per each of them.
- 13th/14th salary: Following the introduction of the 13th and 14th salary in the Labor Code, exemption of such salary up to the amount of EUR 500 has been introduced in Article 5 Section 7 of the Income Tax Act. Provided that 13th salary was paid already in June 2018 (at least in the amount of average monthly earnings of the employee) and on 31 October the employee has been employed for at least 48 months by this employer, on 14th salary paid in December 2018 (at least in the amount of average monthly earnings of the employee), exemption from taxation up to EUR 500 can be claimed for the first time in December 2018 under the transitional provisions to this amendment. However, the exemption with respect to 13th salary paid in June may be claimed in June 2019 for the first time.
- Accommodation of employees working in multiple shifts operations: On 4 December 2018, an amendment to the Act on the use of electronic cash registers was approved. Through this amendment, another exemption from taxation has been introduced in Article 5 Section 7 of the Income Tax Act. Non-monetary benefits in the form of accommodation provided to an employee by an employer whose predominant activity is production carried out in multiple shifts operation will be exempted up to EUR 60 per month. This can be applied already in 2018 annual settlement or 2018 tax return. The exemption is subject to certain conditions, mainly accommodation provided in employer’s buildings classified under codes 112 and 113 of the Building Classification.
For the year 2019, some more changes will be added:
- Exemption claimed on 13th salary mentioned above.
- Change in tax bonus with respect to dependent children: On 4 December 2018, an amendment to the Income Tax Act was adopted. The amendment is changing child's tax bonus effective from 1 April 2019. As of this date, tax bonus with respect to children up to six years of age will be doubled.
- Recreational vouchers: An amendment to the Act on travel and tourist industry promotion introduces also an exemption from taxation of recreational contributions, if provided to employees in accordance with the Labor Code. We describe this topic in more details in another article.