News in the area of employee taxation

Since the beginning of the year, changes have been introduced in the taxation of employees and in the area of social security and health insurance. The maximum assessment base for social security contributions has been increased; thus, the limit for taxation at the higher tax rate of 23% has also been raised. A new discount on contributions for vulnerable employees has also been introduced. At the same time, after almost twenty years, the income limit for filing personal income tax returns has been significantly increased.

The maximum annual assessment base for social security contributions has been increased to CZK 1,935,552 (i.e. CZK 161,296 per month). At the same time, employee income exceeding this amount is taxed at a higher tax rate (23%). Up to this limit, the 15% income tax rate continues to apply.

As of January 2023, the minimum wage has been increased from CZK 16,200 to CZK 17,300, and the minimum guaranteed hourly wage has also been increased to CZK 103.80. For this reason, the minimum monthly assessment base for health insurance for employees has also increased. Therefore, the discount on placing a child in a pre-school institution (the nursery fee) and the income limit for entitlement to the tax bonus per child have also been increased.
The limit of taxable income when the obligation to file an income tax return has increased from CZK 15,000 to CZK 50,000 per year. In the case of employees, taxable income from sources other than employment may reach a maximum of CZK 20,000 per year for the 2023 tax year without the obligation to file a tax return (instead of the previous CZK 6,000).

As of 1 February 2023, employers can take advantage of a 5% discount on social security contributions for certain employees (e.g. those under 21 years of age or over 55 years of age.) working part-time. Instead of the standard 24.8% of the employer's assessment base, they can pay only 19.8%.

In the event that the condition of using assets for vocational training was not met in the given period, the amendment would consider this condition to have been met anyway; hence there would be no negative consequences related to failure to comply with the condition. Further, the period during which assets should be used will be prolonged by the same number of tax periods during which the condition was not fulfilled (but was considered to have been fulfilled).