Increased Threshold for Application of a Gift’s Deduction from the Tax Base Extended until 2026
On 11 February 2025, an amendment to Act No. 128/2022 Coll., on Tax Measures in the Context of the Armed Conflict in the Territory of Ukraine Resulting from the Invasion of Russian Federation’s Army came into force.
Gift’s Deduction from the Tax Base
The amendment extends again the period of time, in which the free-of-charge supply’s (gift’s) value can be deducted from the tax base in the amount of up to 30% in total. Both natural and legal persons will be able to apply a gift as a deduction from the tax base for taxation periods 2024 through 2026 (the legal persons also for the taxation period ending 28 February 2027).
Applying a Gift as a Tax Expense
Taxpayers continue to be able to pick up the option of an expense for a free-of-charge non-monetary supply (gift) provided as aid to Ukraine being a tax-deductible expense (cost). Gifts provided directly to Ukraine, its local authorities or natural or legal persons registered or residing in the Ukraine’s territory for purposes, in connection with which the free-of-charge supply’s value can be deducted from the tax base (Section 15 (1) and Section 20 (8) of the Income Tax Act), will be tax deductible.
If a gift is applied as a tax-deductible expense (cost), the gift’s value cannot be concurrently applied as an item deductible from the tax base.
Exemption of Income
Until 2026, employees’ income in the form of provided accommodation in taxation periods 2022 through 2026 will be exempt from income tax, where the accommodation is provided by an employer to an employee and his or her family members residing in the territory of Ukraine due to such family member having left Ukraine in connection with the armed conflict in Ukraine’s territory resulting from the invasion of the Russian Federation’s army.
In parallel, the amendment also extends the period of time for exemption of a free-of-charge income received in 2022 through 2026 for the purpose of supporting Ukraine’s defensive efforts.
Monika Ruprechtová
ruprechtova@clarksonhyde.cz
