How to deal with income received by individuals as part of Covid-19 programmes in a tax return


Income exempt from income tax, i.e. not included in a personal income tax return:

  • Compensation bonus for entrepreneurs – this is a tax bonus which, under Section 4 (1zj) of the Income Tax Act, is exempt.
  • Care-giver’s allowance for self-employed persons this is a subsidy which is exempt from income tax according to a special provision contained in Act No. 159/2020 Coll. and 461/2020, on Compensation Bonus.
  • Subsidy from the Antivirus programme provided to self-employed persons with employees – this is a subsidy received as a benefit from the application of state employment policy instruments, which are exempt from income tax under Section 4 (h) of the Income Tax Act. The important information on this contribution is that since it is income exempt from tax, the expenses related to it are also tax ineffective (according to Section 25 (1i) of the Income Tax Act).
  • One-off contribution to pensioners, the “mask allowance” – this contribution of CZK 5,000 is exempt from personal income tax under Section 4 (1i) of the Income Tax Act.

Taxable income, i.e. included in the person income tax return:

  • Other subsidies received in connection with COVID-19 - in particular COVID - BUS, COVID - RENT, COVID - GASTRO, COVID - ACCOMMODATION, COVID - SPORT, COVID - CULTURE.

As these are operating subsidies of a non-investment nature (i.e. they are not intended for the acquisition of tangible assets), they cannot be exempt under Section 4 (1u) of the Income Tax Act. This is taxable income that must be included in the tax return. An individual can claim an expense that is demonstrably incurred and covered by this subsidy as tax deductible.