Minimum Salary, Maximum Base for Social Insurance
Effective from January 1, 2019, the minimum salary has been increased from CZK 12,200 to CZK 13,350. The amount of the minimum hourly salary has been increased from CZK 73.20 to CZK 79.80.
The 2019 maximum annual base for the social insurance and subsequently also the 2019 annual solidarity tax limit is CZK 1,569,552. Monthly limit for the solidarity tax deduction obligation is CZK 130,796.
Tax Legislation Changes
In 2019, the tax still shall be calculated from „super-gross salary“. Neither the proposed cancellation of this calculation method nor progressive income tax rate set-up, which were a part of the „2019 Tax Package“, have been approved. These proposals have been removed from the Tax Package. There also remain the same tax rates, i.e. 15 % for advance and withholding tax and 7 % for solidarity tax. There is also no change in the tax discounts and tax bonuses for children.
There is a significant change in the tax calculation method in case of employees who pertain to social system of another EU or EEA country or Switzerland. From January, 1, 2019, the super-gross salary of these employees shall be newly calculated from the foreign health and social insurance paid by the employer instead of increasing the income by 34 % (equivalent of the insurance payment paid by the employer in accordance with the Czech legislation), as has been done so far.
Social Security Legislation Changes
From, January 1, 2019, the monthly employee income setting up the participation in the illness insurance system, has been increased from CZK 2,500 to CZK 3,000. The Agreements on Work Performance will not be newly subject of the insurance payments in case of income up to the amount of CZK 2,999/month.
There is expected the unification with the tax legislation and the limit for withholding tax payment for the employees who have not signed the tax declaration shall be increased to CZK 3,000 as well. The respective amendment has not been approved yet and shall come into effect during the year 2019. Therefore, currently there is certain inconsistency between the limit for the payment of the illness insurance and the withholding tax.
Changes in Statistic Reporting
There is a new legislation duty for the ISPC (Trexima) statistic reports respondents valid for the 2018 report (submitted in January 2019) the first time. For the proper completion of the report, there is newly required to add the education branch in the form of the code.
In order to set up the code of the branch of the highest education, the new web application „Selection of the branch education“ has been set up for the respondents on: https://www.obory-vzdelani.cz/.
The code of the branch of the highest education must be completed for all employees who have reached higher education than the basic one. For the employees with the basic education the item can remain blank.
This obligation is applicable with exception of the employees working based on the agreements out of the employment relation, exempted employees and employees whose employment has been terminated in 2018.
Other Legislative Changes which Shall Come into Effect During the Year 2019 or 2020
- There still has not been approved the proposal for cancelation of the waiting period, i.e. the salary compensation shall be paid from the first day of illness already. As a compensation for the employer, the rate of the social insurance paid by the employer shall be reduced from current 25 % to 24.8 %.
- Increase of the parental contribution from CZK 220,000 to CZK 260,000, respectively from CZK 330,000 to CZK 390,000 (more children) from the year 2020.
- Cancellation of the tax calculation by the super-gross salary method and set-up of the progressive tax rate instead (currently removed from the 2019 Tax Package).
Labour Code Amendment:
- Guarantee of the original working place and work conditions upon return from the parental leave
- Shortening of the settlement period for Agreement on Work Performance from 52 weeks to 26 weeks
- Automatic calculation of the minimum salary increase
- New vacation concept
- Changes in documents delivery
Anna Vraná Rubínová
Payroll Consultant Senior