Proposal of changes in the area of taxation of natural persons in connection with the introduction o
Proposal of changes in the area of taxation of natural persons in connection with the introduction o
As part of the "EET 2.0" proposal, the Ministry of Finance proposes, in addition to adjustments to the sales records, changes to the Income Tax Act in the area of natural persons. Some of the proposed changes are related to the impact of the introduction of EET 2.0, others relate to the modification of employee benefits or the reintroduction of some discounts in accordance with the program statement of the Government of the Czech Republic. Most of the changes are proposed with effect from 1. January 2027. The draft law was submitted by the Ministry of Finance for comments on 19 February 2026 and may therefore undergo more significant changes.
EET OFF mode
In connection with the introduction of EET 2.0, the option of the "EET OFF" regime is being introduced, which is intended for the smallest entrepreneurs in the first lump-sum tax band. The regime responds to the long-standing argument that the smallest entrepreneurs with low turnover pose only limited risk and that full sales records often meant an administrative burden disproportionate to the actual benefit.
Entrepreneurs in the first band of the flat-rate tax, whose income does not exceed CZK 1 million, will thus be able to avoid the EET altogether, albeitat the cost of a minimum of CZK 1,400 to the flat-rate tax. It is therefore not a matter of "free exemption", but of the possibility of choosing - either the entrepreneur registers the marketin full or pays a higher flat tax. Entrepreneurs will be able to join the EET OFF regime with a notification of the tax on specific dates. If the entrepreneurceases to meet the conditions(e.g. exceeds the income limit), the obligations of the EET 2.0 will fall on himfrom the followingtaxperiod.
The amendment also takes into account a situation where an entrepreneur in the flat-rate regime of the first band "registered for the surcharge" would be obliged to file a tax return (e.g. by violating the conditions of the flat-rate tax regime). The surcharge would then be added to the resulting tax liability in the tax return.
One-time discount on sales records
Part of the changes in the tax area is the introduction of a discount on sales records, which is intended to partially compensate entrepreneurs for the administrative costs associated with the reintroduction of records. The discount is a one-time discount and can reach a maximum of 5,000 KNo. Itis based on the differencebetween 15% of the taxpayer's tax and the basic taxpayer's discount. In practice, this means that the full amount of CZK 5,000 will be deducted, especiallyfor tollswith a sufficiently hightax rate. The decisivefactor for the application of the discount is that the fee registers the sale subject to mandatory registration inthe EET 2.0 period. The discount will thus be appliedin the taxperiod when the feeforthe first sale in the newregimewill go away, whichis the case in 2027 at the earliest, when EET 2.0 is to start operating.
A discount for placing a child in a preschool facility should also be re-introduced. Its amount corresponds to the demonstrable expenses for the placement of a dependent child in a pre-school facility, but up to a maximum of the minimum wage. At the same time, the amendment defines in detail what is considered a pre-school facility and also addresses situations of multiple households, such as shared care.
A novelty should also be the obligation of preschool facilities to submit electronic notifications to the tax administrator on the amount of the amounts paid for individual children. This change is aimed at simplifying control and eliminating the risk of double application of the discount.
Changes should also occur again in the area of employee benefits, namely in the area of the conditions for the exemption of employee income. The related changes are then also to be reflected in the tax deductibility of the related costs.
The amendment envisages the abolition of the limit for the exemption of most so-called leisure benefits (until now, the exemption was limited to half of the average wage per year), which returns the legislation to the regime valid until the end of 2023. The only exception with a set limit of CZK 20,000 per taxable period should be the contribution for recreation and tours.
The exemption of income from participation in a social event, including one with a cultural or sporting element, organized by an employer for a limited group of participants, is moved to the same provision of the Act. However, this does not have a major impact on the application of the exemption. It is still necessary for the actions to be of a reasonable scope and in the usual form for the employer. The income exemption under this provision is without an upper limit.
As a new type of exempt benefit, the legislators propose a contribution to social services, such as personal assistance, care or emergency care, or day-care services, if they are provided as services of a community-based nature and on the basis of authorization under the law governing social services. This step responds to the needs of employees caring for loved ones and supports employers who decide to contribute to services that enable the reconciliation of care and work.
Health benefits remain unchanged, so the annual exemption limit of the average wage per tax period should continue to apply to them.
Other conditions for the exemption are also to be maintained, i.e. that the employer's contribution must be non-monetary, arising from non-tax costs, profit after tax, or from a social fund, and that it must be a performance that is not a wage, salary, remuneration or compensation for lost income.
Another novelty is the proposed exemption of tips in catering services. The tax exemption applies to voluntary tips provided to an employee by a person other than the employer in direct connection with the provision of a catering service in a catering establishment.
Tips of up to 7% of the employee's income from cateringservices should be exempt. The limit is aggregate for all employees who have received tips from catering services for the given calendar month for the performance of their activities. The distribution of the 7% exemption limit of the employer's sales from catering services is then either equally among all these employees (7% / number of employees with tips) or is determined by the employer.
According to the explanatory memorandum, the proposed aid exemption could even out the differencebetween cash and non-cash tips, while reducing uncertainty for employees and employers about their tax regime. However, the use of the term employer's income from catering services, which is not defined in the proposed regulation, is potentially problematic.
We will follow further developments for you.
1) Impacts on taxation of natural persons in connection with EET 2.0
EET OFF mode In connection with the introduction of EET 2.0, the option of the "EET OFF" regime is being introduced, which is intended for the smallest entrepreneurs in the first lump-sum tax band. The regime responds to the long-standing argument that the smallest entrepreneurs with low turnover pose only limited risk and that full sales records often meant an administrative burden disproportionate to the actual benefit.
Entrepreneurs in the first band of the flat-rate tax, whose income does not exceed CZK 1 million, will thus be able to avoid the EET altogether, albeitat the cost of a minimum of CZK 1,400 to the flat-rate tax. It is therefore not a matter of "free exemption", but of the possibility of choosing - either the entrepreneur registers the marketin full or pays a higher flat tax. Entrepreneurs will be able to join the EET OFF regime with a notification of the tax on specific dates. If the entrepreneurceases to meet the conditions(e.g. exceeds the income limit), the obligations of the EET 2.0 will fall on himfrom the followingtaxperiod.
The amendment also takes into account a situation where an entrepreneur in the flat-rate regime of the first band "registered for the surcharge" would be obliged to file a tax return (e.g. by violating the conditions of the flat-rate tax regime). The surcharge would then be added to the resulting tax liability in the tax return.
One-time discount on sales records
Part of the changes in the tax area is the introduction of a discount on sales records, which is intended to partially compensate entrepreneurs for the administrative costs associated with the reintroduction of records. The discount is a one-time discount and can reach a maximum of 5,000 KNo. Itis based on the differencebetween 15% of the taxpayer's tax and the basic taxpayer's discount. In practice, this means that the full amount of CZK 5,000 will be deducted, especiallyfor tollswith a sufficiently hightax rate. The decisivefactor for the application of the discount is that the fee registers the sale subject to mandatory registration inthe EET 2.0 period. The discount will thus be appliedin the taxperiod when the feeforthe first sale in the newregimewill go away, whichis the case in 2027 at the earliest, when EET 2.0 is to start operating.
2) Tax Credits for Families and Students
The amendment proposes the reintroduction of a student discount in the amount of CZK 4,020. This discount is to be granted to taxpayerswho are systematically preparing for a future profession up to the age of 26 and full-time doctoralstudents up to the age of 28. This is a returnto the method of applying the discount valid before 2024.A discount for placing a child in a preschool facility should also be re-introduced. Its amount corresponds to the demonstrable expenses for the placement of a dependent child in a pre-school facility, but up to a maximum of the minimum wage. At the same time, the amendment defines in detail what is considered a pre-school facility and also addresses situations of multiple households, such as shared care.
A novelty should also be the obligation of preschool facilities to submit electronic notifications to the tax administrator on the amount of the amounts paid for individual children. This change is aimed at simplifying control and eliminating the risk of double application of the discount.
3) Employee benefits
Changes should also occur again in the area of employee benefits, namely in the area of the conditions for the exemption of employee income. The related changes are then also to be reflected in the tax deductibility of the related costs. The amendment envisages the abolition of the limit for the exemption of most so-called leisure benefits (until now, the exemption was limited to half of the average wage per year), which returns the legislation to the regime valid until the end of 2023. The only exception with a set limit of CZK 20,000 per taxable period should be the contribution for recreation and tours.
The exemption of income from participation in a social event, including one with a cultural or sporting element, organized by an employer for a limited group of participants, is moved to the same provision of the Act. However, this does not have a major impact on the application of the exemption. It is still necessary for the actions to be of a reasonable scope and in the usual form for the employer. The income exemption under this provision is without an upper limit.
As a new type of exempt benefit, the legislators propose a contribution to social services, such as personal assistance, care or emergency care, or day-care services, if they are provided as services of a community-based nature and on the basis of authorization under the law governing social services. This step responds to the needs of employees caring for loved ones and supports employers who decide to contribute to services that enable the reconciliation of care and work.
Health benefits remain unchanged, so the annual exemption limit of the average wage per tax period should continue to apply to them.
Other conditions for the exemption are also to be maintained, i.e. that the employer's contribution must be non-monetary, arising from non-tax costs, profit after tax, or from a social fund, and that it must be a performance that is not a wage, salary, remuneration or compensation for lost income.
4) Tipping
Another novelty is the proposed exemption of tips in catering services. The tax exemption applies to voluntary tips provided to an employee by a person other than the employer in direct connection with the provision of a catering service in a catering establishment. Tips of up to 7% of the employee's income from cateringservices should be exempt. The limit is aggregate for all employees who have received tips from catering services for the given calendar month for the performance of their activities. The distribution of the 7% exemption limit of the employer's sales from catering services is then either equally among all these employees (7% / number of employees with tips) or is determined by the employer.
According to the explanatory memorandum, the proposed aid exemption could even out the differencebetween cash and non-cash tips, while reducing uncertainty for employees and employers about their tax regime. However, the use of the term employer's income from catering services, which is not defined in the proposed regulation, is potentially problematic.
We will follow further developments for you.