New rules for taxation of employee low-emission cars

According to information issued by the General Financial Directorate (GDF), the non-monetary income for a low-emission vehicle will now be set at 0.5% of the purchase price of the vehicle per month from 1 July 2022 (1% for other types of cars). Even though the pertinent amendment to the relevant parliamentary act is effective from 1 July 2022, the transitory provisions allow the new rule to apply for the entire 2022 tax year.

The informational note issued by GDF explains how to treat any overpayment for the first half of 2022, before the amendment came into effect. However, it does not deal with overpayments of social security and health insurance contributions for the first six months of 2022, and it does not define low-emission vehicles either. The question still is: what vehicles fall into this category and how will their low-emission quality be proven?

According to a statement issued by the General Health Care Insurance Company ("Všeobecná zdravotní pojišťovna"), for the purposes of calculating health insurance contributions, the reduced amount of the given non-monetary benefit can be applied to the assessment base from the effective date of the act (i.e. from 1 July 2022), but not retroactively for the first half of 2022. In practice, this means that the total annual assessment base for health insurance contributions in respect of an employee in 2022 will differ from total annual taxable income. The Czech Social Security Authority has not commented on this yet.