Pre-school child care

11 September 2013

When an employer provides its employee a non-monetary benefit in the form of paying the nursery fee to the kindergarten or nursery, this benefit is regarded as non-taxable for the employee. It is also exempt from social security and health insurance. However, on the employer’s side it is regarded as tax non-deductible expense.

 

We have, however, encountered that the fee was split into the tuition fee and meal and invoiced separately. We would like to point out that separately invoiced meal is regarded as a taxable benefit that is taxed at the employee’s side and also social security and health insurance should be appropriately deducted.

 

If an employer pays for a nanny, it is again a taxable benefit subject to social security and health insurance. It can be regarded as deductible expense for the employer if the conditions were covered in an employment contract or stated by an internal regulation.

 

Even more interesting situation comes up when a self-employed parent pays for a nanny. If the entrepreneur is able to prove a relation with his business (taking care of the child while being on meetings or while attending to customers in his shop), our opinion is that such an expense can be included in his taxable expenses.

 

Proposed law on “child group” will bring more opportunities how to include expenses on nursery fees to tax-deductible expenses.

Made by AG25 s.r.o., 2013
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