In connection with the adoption of the Act on the Unified Monthly Reporting System, an amendment to the Income Tax Act has also been introduced, reflected in the update of Section 6(9)(d) of the ITA. The purpose of this amendment is to clearly distinguish the tax treatment of employee benefits from benefits in kind and similar non-cash remuneration provided by employers to employees.
The previous wording of the provision stated that “non-cash benefits provided by the employer to the employee” are exempt from personal income tax if they meet other statutory conditions. The amendment now adds a clarification specifying that these exempt non-cash benefits are “non-cash benefits that do not constitute wages, salary, remuneration, or compensation for lost income.”
This change responds to case law of the Supreme Administrative Court, which indicated that the existing legislation made it possible to apply the tax exemption even to income that has the character of non-cash wages or remuneration for work performed. However, the legislator never intended to create a different tax regime for wages or remuneration depending on whether they are paid in cash or in kind.
When drafting the rules in the ITA, the long-standing principle has been that tax-exempt income includes voluntary employer-provided benefits granted beyond regular wages, salary or remuneration under agreements outside employment, and directed toward legally defined areas supporting broader societal interests (education, culture, sport, health prevention, etc.). The tax exemption was therefore always intended to apply to employee benefits.
