Recreation allowance

What it means

The recreation allowance is an employer contribution to an employee’s holiday in Slovakia: 55 % of eligible spending up to a statutory annual cap.

For employers with more than 49 staff it is mandatory on the employee’s request where the service condition is met. Smaller employers may offer it but need not.

For the employee the allowance is not wages: within the limits the law sets it is exempt from tax and free of contributions, so the full amount arrives. That distinguishes it from a one-off holiday bonus, which is taxed and bears contributions like any other pay, even though it may cost the employer the same.

How it works in practice

The conditions are a document in the employee’s name, a stay of at least two nights and payment by the employee. The company reimburses its share and books it as a deductible cost.

A recreation voucher is the alternative. It is administratively simpler, but the issuer’s fee means the employee receives slightly less for the same money.

In payroll we track for each employee how much of the annual cap has been used, because receipts may come in over several stays during the year. We pay the allowance with the next pay run as a separate line outside taxable income, so it stays clearly apart on the payslip and in the annual reports.

What to watch out for

An employee may claim it with only one employer and only once a year. Companies therefore require a declaration, or they pay a second time for what someone else already covered.

If the company reimburses more than the law allows, or a stay that does not meet the conditions, the difference is no longer a recreation allowance but taxable income of the employee. It must be taxed and bear contributions in the month paid; an inspection recalculates it retrospectively and adds a penalty and interest to the missing tax and contributions.