Slovak employers to contribute to the holiday of their staff
The amendment to Act on Support of Tourism and the amendment to the Labour Code introduced recreation allowances for employees effective since 1st January 2019.
The obligation to provide recreation allowances applies to every employer employing more than 49 employees. In practice this means that employers with 50 and more employees will be obliged, upon an employee’s request, to provide them with such allowance, and employers with 49 and less employees may provide recreation allowances at their own discretion.
The fact that is decisive for whether an employer is obliged to provide their employees with recreation allowances or not, is the average number of registered employees in a previous calendar year.
The entitlement to such allowance only applies to employees who have been employed by a particular employer for at least 24 months. This means that employers will have to check this period with every request of their employee for such allowance.
Employers are obliged to contribute to their employees’ recreational activities with the amount representing 55 % of the recreation cost, but no more than EUR 275 per year. As for the employees with whom the employment has been agreed for a shorter period of time, the sum of EUR 275 is reduced proportionally to the agreed employment term.
In one year, an employee is only entitled to request for the recreation allowance from one employer.
Instead of refunding costs, an employer may decide to provide a recreation allowance to a staff member through a holiday voucher. When providing recreational allowances with a holiday voucher (note that there is only a limited number of providers), the agency service fee is maximum 3% of the value of the holiday voucher.
If the holiday allowance was not provided through a holiday voucher, the employee shall provide the employer with the eligible expenses no later than 30 days after the end of the recreation by presenting the original accounting documents, which must include the name of the employee (name of the person who used the service). The employer shall provide an employee with a recreation allowance upon presentation of the accounting documents at the earliest payable date determined by the employer for the payment of the wage, unless the employer agrees otherwise with the employee. If a holiday allowance was not provided through a recreational voucher, at the request of the employee, the recreation allowance, which began in one calendar year and lasts continuously in the following calendar year, shall be considered as a holiday allowance for the calendar year in which the recreation started.
The recreation allowance may be used for:
- tourism services associated with accommodation for at least two nights in the Slovak Republic;
- an accommodation package comprising at least a two-night stay and boarding services or any other services associated with recreation in the Slovak Republic;
- accommodation for at least two nights in the Slovak Republic that may also include boarding services;
- organised activities lasting several days and recreational events during school holidays in the Slovak Republic for employees’ children attending elementary schools or any of the first four years of grammar schools with the 8-year study course.
Not only the Labour Code but also the Income Tax Act has been amended. From the employees’ point of view, the recreation allowances provided to them by their employers will be exempt from the income tax.
The sums provided by an employer to their employees as the recreation allowances will not be subjected to taxation or health and social insurance. Therefore, a recreation allowance will represent net income of an employee.
For employers, these mandatory recreation allowances represent tax expenditures that will reduce their income tax base.
With regard to the provision of the allowance for recreational vouchers, employers will experience a higher administrative burden and they will have to adjust their corporate procedures. Moreover, they will have to address other issues, such as the tax regimen for recreational vouchers as to the VAT, a possibility to use the social fund in order to pay such allowances, preparation of new by-laws on recreational vouchers, etc.
An interesting idea to support local tourism has thus changed in a complicated extra administrative burden for companies that will cost them a lot of extra time and money.
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