As part of recent legislative changes, a new provision—Section 6(9)(g) of the Income Tax Act (ZDP)—was introduced via a parliamentary amendment to clarify the tax treatment of certain non-cash benefits provided by employers to their employees.
This provision separates a specific group of benefits—previously covered under Section 6(9)(d) ZDP—into their own category. It applies to non-cash income resulting from the participation of employees or their family members in employer-organized cultural or sporting events. These events must be:
Organized for a limited group of participants (e.g., employees, their families, business partners),
Usual and customary for the employer, and
Reasonable in form and scope.
Purpose of the Amendment
The rationale behind this change was to simplify tax administration. Events such as Christmas parties, company anniversaries, or family days often include both social and cultural/sporting elements. Taxing these events under the previous rules required tracking individual employee participation and consumption, which posed a significant administrative burden.
The newly created provision exempts such benefits entirely from income tax, with no monetary limit, unlike other cultural or sporting benefits under Section 6(9)(d) ZDP, which are subject to a cap (e.g., CZK 21,983.50 in 2024).
Key Conditions for Tax Exemption
To qualify for tax-free treatment under Section 6(9)(g) ZDP:
a) The Employer Must Organize the Event
The employer must act as the organizer—even if a professional service provider is hired.
The event must include cultural or sporting content directly organized by the employer.
Tickets provided to third-party events (e.g. concerts or sports matches) as part of a broader company gathering do not qualify under this rule and fall under Section 6(9)(d) ZDP instead.
b) The Event Must Be for a Limited Group
Participation should be limited to employees, family members, business partners, and other invited guests.
It must not be open to the public; rather, it should be a “by invitation only” event.
c) Usual and Reasonable Nature of the Event
The usual character is judged against standard business practice and the employer’s past behavior (e.g. regular employee sports day, annual family picnic).
Reasonableness is determined based on:
Type of event (e.g. department outing vs. exotic retreat),
Location (domestic locations are generally more acceptable than foreign resorts),
Frequency (e.g. once or twice per year; weekly events may not qualify),
Scope of invited guests.
The employer should be prepared to prove the targeted nature of the event, such as through guest lists or invitations.
d) Definition of Family Members
According to General Financial Directorate (GFŘ) guidelines (Instruction D-59), family members include not only spouses and children but also partners in a shared household and other dependents living with the employee.
Summary
Thanks to the new Section 6(9)(g) ZDP effective since January 1, 2024, employees can enjoy employer-organized events—such as company parties or family sports days—without worrying about tax implications, provided the events are customary, appropriately limited in participation, and reasonable in scope.
Employers, in turn, benefit from reduced administrative obligations, as there’s no need to calculate the value of individual benefits or track participation for tax purposes.