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Actual Legislative Changes Having Impact on Payroll Process in 2018
Minimum Salary, Maximum Base for Social Insurance
Effective from January 1, 2018, the minimum salary has been increased from CZK 11,000 to CZK 12,200. The amount of the minimum hourly salary has been increased from CZK 66 to CZK 73.20.
The 2018 maximum annual base for the social insurance and subsequently also the 2018 annual solidarity tax limit is CZK 1,438,992. Monthly limit for the solidarity tax deduction obligation is CZK 119,916.
Tax Legislation Changes
There has been an increase in the amount of the tax discount for the first child to CZK 15,204 (CZK 1,267 per month) for the year 2018.
The 2018 Tax Declaration can be made in the electronic form. This is possible with guaranteed electronic signature or through the internal (secured) electronic system of the employer. For that reason, the new Tax Declaration form (form No. 26) and Application for the 2018 Annual Tax Reconciliation (form No. 1) have been issued. In case the electronic submission is not used, you may still use the current Tax Declaration forms (No. 24 or No. 25).
The entitlement to the basic and extended tax discounts for invalidity, increased tax discounts for spouse or children and tax discounts for invalidity card holders newly depend on the day when the respective invalidity pension/benefit has been approved by the authorities. The time of actual pension payment is not relevant any more.
There has been extended a possibility to use the withholding tax payment in case the tax payer does not sign the Tax Declaration form. In addition to the Agreement on Performance of the Work Assignment this tax is newly applicable also for the employees whose total income in the calendar month does not exceed the amount of CZK 2,500, notwithstanding the type of employment relation.
Social Allowances
Effective, January 1, 2018, the tariffs for calculation of the sickness compensation have been increased as follows:
60% from 15th to 30th day of illness
66% from 31st to 60th day of illness
72% from 61st day of illness
This relates only to the tariffs applicable for the amounts paid by the Social Security Authority. The sickness compensation paid by the employer remains unchanged.
Paternity holiday (effective from February 1, 2018)
- This allowance is applicable to the father or a person adopting a child
- It can be taken in the period from the date of the birth/adoption until the age of 6 weeks (6 weeks from the adoption)
- The period of the actual holiday/absence is one week and the employee selects its beginning. It cannot be interrupted
- The allowance is 70% from the social security base
- The application must be made by the employee on the prescribed form and the employer submits it together with the annex to the Social Security Authority. In case of adoption the adoption certificate must be submitted.
- This allowance can already be claimed for the children born on December 21st 2017, in case the application is submitted on the effective date of this act amendment, i.e. on February 1, 2018.
Long-Time Family Member Care (effective from June 1, 2018)
- This allowance can be claimed up to 90 days (cannot be extended), the calculation of the allowance is same as for standard family member care. There must be a gap of at least 12 months to be entitled to claim this allowance repeatedly.
- The condition is the sudden health worsening of the treated person which requires hospitalization of at least 7 days. After the discharge from hospital, there must be need of permanent care/treatment for 30 days at least. The treated person must give a written consent to the treating person (allowance applicant).
- The treating person can be either the family member or another person living in the same household.
- There is a possibility to change the treating person during the full period of long-term family member care.
- Once the allowance applicant returns to work, the allowance entitlement ceases to exist.
Legislative Changes Having Impact on the 2017 Annual Tax Reconciliation
and other 2017 Year-End Closing Activities
Tax Legislation Changes
There has been an increase in a limit for reduction of the annual tax base by own contributions to the pension or life insurance to CZK 24,000. In 2017 reconciliation, the amount of CZK 1,000 (amount which is subject of the state benefit) must be deducted from the pension insurance contribution per each month when the contribution payment has been made. In comparison with previous years, there is no fix deduction of CZK 12,000 and the actual deduction depends on the number of the months when the contributions have been paid, as well as on their amounts. For that reason, the new format of confirmations should be issued by the Pension Funds for the purposes of annual tax reconciliation / personal income tax returns.
There has been an increase in the amount for blood donation to CZK 3,000 per each blood taking (blood and blood plasma). It is also newly possible to reduce the tax base for donation of the bone marrow by the amount of CZK 20,000 per each taking.
Changes of the Act on Employment
On October 1, 2017, the amendment of the Act on Employment has become effective. It determines new obligations for the providers employing more than 50% handicapped employees, to enter the data about their sales and payments for goods/services into the electronic evidence held by the Ministry of Labour and Social Affairs within 30 days from the payment receipt. Within the Annual Handicap Report the buyers can then report only these purchases of products which are recorded in this evidence. However, the purchaser is not obliged to list and prove these purchases in the annual reporting any more, e.g. in the form of annex as required in previous years. This change is applicable for the 2017 Handicap Reports, i.e. those prepared and submitted in 2018.
Text: Anna Rubinova, Payroll Consultant Senior