The Czech Parliament approved a bill that reduces the non-monetary taxable income arising for employees using low-emission company cars for both business and private purposes. The bill was published in the Collection of Acts No.142/20221 and is effective as of 1 July 2022.


The Czech government has granted tax advantages to employees for using of low-emission company cars for both business and private purposes. Reduction of employees´ taxable income should lead to wider use of low-emission company vehicles whose purchase price is currently much higher than cars powered by traditional petroleum fuels.

Since this benefit-in-kind is subject to the obligatory social and health insurance contributions payable both by the employer and the employee, it is likely that this change might bring some savings not only for the employees but for the employers as well.


For low-emission vehicles, the amount of taxable income of employees who use a company car also for private purposes was reduced and is now 0.5 percent of the purchase price of the vehicle.

A low-emission vehicle is defined by the Act as a road vehicle in the M1, M2 or N1 category that does not exceed the CO2 emission limit of 50 g/km and 80 percent of the emission limits for air pollutants as per the supplement/EU regulation No. 715/2007 on type-approval of motor vehicles with respect to emissions from light passenger vehicles (€ 5 and € 6). The legislators specifically confirm that “low-emission vehicles” include electric vehicles, hydrogen vehicles and further plug-in hybrids or extended-range electric vehicle, provided they meet the above environmental parameters.

While the amendment is effective from 1 July 2022, transitional provisions allow the new rule to be applied for the entire taxable period of 2022 (i.e., the entire calendar year of 2022). The recent General Financial Directorate’s Information2 addresses how to treat the reduction in non-monetary income (and the resulting tax overpayment) for months prior to the effective date of the law (the period  of January - June 2022), both with respect to the annual settlement of income tax prepayments done by the employer and to the certificate of taxable income from employment issued by the employer for employees who file their own income tax returns.

Insurance and Social Security

The General Financial Directorate’s information does not address how to proceed with social security and health insurance contributions for the first six months of 2022, nor does it provide a more detailed definition of low-emission vehicles. This raises several questions, namely as to which cars fall under this category and how taxpayers can prove that the conditions set out in the law have been met.

A Czech health insurance company responded to a query from the Chamber of Tax Advisor that for the purposes of calculating health insurance premiums, the reduced value of a given non-cash benefit can be included in the assessment base only from the effective date of the law, i.e., from 1 July 2022 and not retroactively for the first half of 2022.

The same approach is followed by Czech Social Security Administration, which also confirmed that is it not possible to consider the reduced taxable income of employees for the period of January-June 2022 and make any amendments to social security premiums for these months.


In practice, this means that the total annual assessment base for health insurance contributions and social security contributions and the employee's total annual taxable income for 2022 will differ if the employee is provided with a low-emission company car.                


1  Information for Payers of Income Tax on Employment (in Czech), Informace pro plátce daně z příjmů ze závislé činnosti .

The information contained in this newsletter was submitted by the KPMG International member firm in Czech Republic.


Connect with us

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today


GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2024 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit