Employee benefits in 2026: current trends and their tax impact

Modern human resources policy cannot function without an effective employee benefits system. From the perspective of tax legislation, however, this is not merely a form of motivation, but above all a strategic tool for optimising the employer's tax liability and reducing the contribution burden on both sides.

Flexible work organisation and supporting work-life balance

The concept of balancing work and private life relies on flexible working time arrangements, homeworking, home office or remote work.

For the employee, they bring stress reduction, savings in commuting time and costs, flexibility in family care and enhanced overall well-being. For the employer, they deliver a significant increase in labour productivity, lower employee turnover, minimisation of workplace absence and enhanced employer attractiveness in the labour market.

Standard wages paid to an employee for work performed under such arrangements represent regular taxable income for the employee and a tax-deductible expense for the employer.

Above-standard paid time off and additional leave

A popular benefit is the provision of additional leave beyond the statutory framework, as well as further above-standard days off. These include days to overcome short-term health indisposition without a medical certificate (sick days), days for mental and physical regeneration (wellness days) or time off for personal occasions such as birthdays. An employer may introduce these days of work leave through a collective agreement, internal regulation or individual employment contract.

For the employer, wage costs and wage compensation provided for extra days off are fully recognised tax-deductible expenses.

For the employee, wage compensation for provided leave is standard taxable income from employment, subject to income tax as well as social and health contributions.

Employee training, deepening and upgrading of qualifications

The Labour Code strictly distinguishes between the deepening of qualifications and the upgrading of qualifications. Deepening of qualifications involves maintaining and updating the knowledge required to perform the work, whereby participation in it constitutes the performance of work. Upgrading of qualifications leads to obtaining a higher level of education.

For the employer, employee training costs related to the company's business activities or operations are fully recognised tax-deductible expenses. These may include fees for courses, seminars, literature and the like. Wages paid during qualification deepening and wage compensation during qualification upgrading represent tax-deductible expenses.

For the employee, the value of the provided training is exempt from income tax. In the case of upgrading qualifications to higher education of levels I and II, the exemption for the employee is conditional upon an employment relationship having lasted continuously for at least 24 months by the start of the academic year. Wages and wage compensation during studies always constitute taxable income.

Recreation allowance for employees and contribution to a child's sports activities

This benefit is mandatory for employers with more than 49 employees. It applies to employees whose employment has lasted continuously for at least 24 months. The allowance amounts to 55 % of eligible expenses for recreation in Slovakia, including accommodation for at least 2 nights, up to a maximum of 275 EUR per calendar year.

The advantage for the employee is financial support for a family holiday domestically, which is not subject to any deductions and which the employee receives at 100 % net value. From an economic point of view, this is the most cost-effective way to increase an employee's net income. Since this benefit is not subject to employer contributions, it is also a suitable benefit for companies with fewer employees. An employee's parent may also claim the recreation entitlement, or the benefit may be used for an organised children's camp with multi-day activities during the summer holidays.

Proven expenses incurred by an employee for a child's sports activities in a sports organisation registered in the register of legal entities in sport are likewise eligible.

For the employer, this benefit is fully tax-deductible. The employer pays no insurance contributions on this amount. For the employee, the recreation allowance amount up to 275 EUR per year is completely exempt from tax and is not subject to employee contributions.

Supplementary pension savings (third pillar)

Supplementary pension savings (hereinafter referred to as "DDS") represent a retention benefit whereby an employer contributes to employees' personal accounts with supplementary pension management companies on the basis of an employer's contract. For the employee, it provides the opportunity to build a long-term financial reserve for retirement with employer contributions, as well as the option to reduce their own tax base by the contributions paid, by up to 180 EUR per year.

Contributions to DDS paid by the employer on behalf of the employee are a tax-deductible expense up to a maximum of 6 % of that employee's accounted wage and remuneration. An important advantage is that the employer's contribution does not enter the assessment base for social insurance, meaning that the employer pays no social contributions on it. However, the contribution is subject to the employer's health contributions.

For the employee, the contribution is taxable income. It is subject to tax advances and employee health contributions. However, it is entirely exempt from employee social contributions. Furthermore, the employee may deduct their own DDS contributions from their tax base, which can yield a direct tax saving of up to 34,20 EUR per year.

Summer bonus and Christmas bonus in 2026 (13th and 14th salary)

The Labour Code precisely specifies the months in which these payments must be disbursed. The summer bonus or 13th salary is paid in June of the relevant calendar year. The Christmas bonus or 14th salary is paid in December of the relevant calendar year.

These monetary payments, which an employer may provide to employees beyond standard wages, are not exempt on either the employee's or the employer's side under current rules of the Income Tax Act. They thus enter directly into the employee's gross wage and represent a tax-deductible expense for the employer. The entire bonus is subject to personal income tax and likewise in full to contributions to the Social Insurance Agency and health insurers in Slovakia. Although these are not preferential benefits in terms of tax or contribution burdens, they remain among the popular benefits provided by employers to their employees.

An exemption of up to 500 EUR last applied to these benefits in 2020. A proposal to reinstate this exemption is currently in the legislative process concerning an amendment to the Income Tax Act. The conditions for exemption from income tax and from social and health insurance contributions will depend on the final approved wording of the amendment.

Provision of a company car for private use

The opportunity to use a company car for personal needs is an employment benefit generally granted only to selected employees. For the employee, this arrangement represents substantial financial savings, as it eliminates the need to purchase a private family vehicle and pay for insurance, regular servicing, tyre replacement or technical maintenance. For the employer's needs, providing a company car to an employee allows for flexible and prompt handling of operational business trips directly from the employee's home.

From a tax perspective, this represents non-cash income for the employee that is subject to standard taxation and contributions on both sides. In the first year of use, 1 % of the input price of the vehicle including VAT is included in monthly wages. For environmentally friendly electric vehicles, this value is reduced by half to 0.5 %. Over the following seven years, the calculation base for the percentage is reduced annually by 12.5 % to account for wear and tear on the car.

In the case of acquiring a passenger motor vehicle in 2026 that is not used exclusively for business, the company loses the right to claim a full VAT deduction and must apply a flat-rate 50:50 regime. This half-limit strictly applies to all ongoing operating expenses as well, such as fuel receipts, servicing or repairs. The Income Tax Act prohibits recognising the non-deducted half of VAT as tax-deductible expenses. Standard vehicle depreciation and maintenance, net of the non-deductible portion of VAT, thus remain tax-deductible for the company.

Meal allowance beyond the statutory framework

A voluntary increase by the employer in the meal allowance for employees beyond statutory obligations is among the simplest and best-received workplace benefits.

When financing the allowance from the social fund, the entire above-limit amount is fully exempt from taxes and contributions for the employee, with no statutory cap on its amount. For the company, this constitutes a non-deductible expense, as the mandatory or voluntary contribution made when creating the social fund was already treated as a tax-deductible expense.

If the allowance provided from regular operating costs of the company exceeds the statutory limit of 55 %, this above-limit portion represents standard taxable income for the employee, on which contributions are also payable. For the employer, such an above-limit allowance is a tax-deductible expense only on condition that it is agreed in the employment contract, collective agreement or internal regulation, and is properly taxed at the employee level.

Non-cash benefit up to 500 EUR per year

This universal benefit enables employers to provide their employees with various non-cash benefits, such as gift vouchers, season tickets to fitness centres or wellness facilities, tickets to cultural events or contributions towards premium medical care. The employee thus receives a valuable token of appreciation of their own choice, while the company gains a swift and administratively straightforward motivational tool that enhances overall workplace satisfaction and builds team loyalty without permanently inflating fixed wage costs.

From a tax and contribution standpoint, this benefit is completely exempt from income tax on the employee's side, and no social or health contributions are payable on it. The main condition for this exemption, however, is that the employer does not claim the funds expended on this benefit as a tax-deductible expense. Even though this represents a non-deductible expense for the company, significant financial savings on mandatory contributions on both sides make this allowance one of the most effective remuneration methods on the market.

^{The content of this article is for informational purposes only and in no way replaces professional legal, tax, or accounting advice. The company Dravecký & Partner bears no responsibility for any decisions made based on the information provided herein, nor for any potential damage that might arise from such actions. Before applying any information to your specific situation, we strongly recommend consulting with a qualified expert.}