Tax and insurance treatment of sports cards (Multisport, Sport pass and others)
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Recently sports cards (Sport Pass, Multisport and others) have become increasingly popular as a social incentive from the employer to the employees. More and more employers are adopting this practice. Immediately after its adoption, however, comes the question of the tax and insurance treatment of sports cards.
The Labor Code provides information on the possible options for social costs. This type of sports card corresponds to the variants described in CT.
Treatment according to ZKPO. VAT and CSR is determined based on the following questions:
- Are all employees entitled to such cards?
- Do employees receiving the card have a deductible for the cost of the card or is it covered entirely by the employer?
I will look at several variations of the practice.
Option 1: All employees are entitled to a sports card and the employer provides it in kind (no cash relationship related to the card).
If all employees have the right to receive such a card (as plastic, not as money) and have no self-participation in it – then the expense is a social expense presented in kind by the employer. This type of expenditure falls within the scope of Art. 204 of the ZKPO and is taxed on expenses (social expenses tax). The expense and the tax on it are recognized for tax purposes in the year of accrual and do not form a tax temporary difference. The tax on social costs is due by March 31 of the year following the year to which it relates.
Option 2: All employees are entitled to a sports card and the employer provides it in kind. Employees pay half of the value of the card.
In this case, there is a monetary relationship between the persons in relation to this acquisition. According to the ZKPO, the existence of monetary relationships in connection with these costs, even if received in kind, does not allow them to be classified as “social costs provided in kind”. This is mentioned in additional provisions of the ZKPO § 1, item 34. The expenses would be treated as an additional remuneration, which is subject to insurance and taxes, and on the full value of the card.
Option 3: Not all employees are entitled to such a card, and the employer provides it in kind (without monetary relations related to the card).
If not all employees are entitled to this card, the cost of the card cannot be treated as a social cost in kind under Art. 204. In this case, there is no tax on the expenses, and the card received by the employee should be taxed as an additional “bonus” to the salary subject to insurance and taxes according to CSR and VAT and on the entire value of the card.
Other similar types of social benefits would be treated in a similar way.
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