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The Czech government has announced important updates to be considered for payroll, effective 1 January 2024.
Notably, this will see a change to social security contributions as employees will now be required to pay a 0.6% sickness insurance. This increases the total contribution rate to 7.1% (inclusive of 6.5% pension insurance contribution). The rate for employers remains unchanged at a total of 24.8%.
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Each year, the maximum assessment base is confirmed and is equal to 48 times the average monthly wage. In 2024, the maximum gross amount considered for social security contributions in 2024 is 2,110,416 CZK. The Minimum Monthly Wage for 2024 has also been confirmed at CZK 18,900 (based on a 40-hour week)
Changes have also been made to the limit for progressive tax from 2024, which will have a significant impact on employees. The tax rate for gross salaries above 1,582,812 CZK, will be subject to a higher tax rate of 23%. Anything below this will be taxed at a rate of 15%.
In addition to these changes, a number of annual tax credits have also been abolished as of 2024. These include the student tax deduction and rebate for children in a pre-school facility. The dependent spouse credit has also been limited and will now only be applied if the spouse cares for a child under the age of 3.
There will also be limits imposed on certain benefits-in-kind. Such benefits will be tax-exempt up to CZK 21,983 per year. Anything above this amount will be subject to tax and social security contribution up to CZK 50,000 per year. Exempt from this is any meal allowance, which has a separate, tax-free limit of CZK 116.20 per shift. This extends to meal allowances provided in a non-monetary form.
These changes follow the amendments made to the Labor Code for remote-working provisions in the country.
Want to know more about our employment solution in the Czech Republic? Did you know Agility EOR has a fully operational Czech entity? Keen to find out more? Check out our employment guide or contact a member of our team for more information.
