06-01-2021
Tax
Czech Republic
payroll, minimum salary 2021, tax, tax discount increase, meal cash allowance, annual leave, transferring annual leave to subsequent year
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you can download it here.
Minimum salary 2021
For 2021, the minimum monthly salary is in the amount of CZK 15,200 and the minimum hourly salary is CZK 90.50.
Tax
The super gross salary is cancelled. It means that tax will now be paid only on the gross salary. In the previous years, the tax was calculated on the gross salary increased by statutory insurance paid by the employer.
The personal income tax rate is 15% and 23%.
Tax rate of 15% applies on the income up to equivalent of 48 times of the average salary, which for 2021 represents CZK 141,764 per month, resp. CZK 1,701,168 per year.
Tax rate of 23% is applied only on the income which exceeds the limit stated above.
If the employee’s monthly gross salary is CZK 150,000, the tax rate 23% will be calculated only from the basis of CZK 8 236 (difference between CZK 150,000 and CZK 141,764).
In addition to the income from employment and business, the tax rate of 23% also applies to so-called other income, capital income and rental income.
The tax discount increase
This year the basic tax discount will increase to CZK 27,840 per year, which is CZK 2,320 per month. In 2022, the discount will increase to CZK 30,840.
Meal cash allowance
The meal allowance is a tax-advantaged cash contribution for meals that can be provided by the employer to the employee. It is an alternative to the company’s canteen and meal vouchers. These do not interfere with the introduction of the meal cash allowance.
The maximum amount of cash contribution is CZK 75 per each worked day. This contribution is a tax-deductible expense of the employer. For employees, this income is exempt from tax and insurance payments.
Annual leave
The calculation of the annual leave entitlement will no longer be based on the number of days worked, but on the number of hours worked.
The annual leave entitlement will be still stated in weeks, but its value will be derived from the employee’s weekly working hours.
There will be almost no change for the employees with regular weekly working hours, who will work for the employer entire year. Instead of the basic 20-day entitlement (4 weeks of annual leave), they will now be entitled to 160 hours of annual leave (4 weeks × 40 working hours per week = 160 hours).
The change will be more significant for such employees who changed their working hours during the year or for employees with irregular working hours, whose working day is not always the same length.
Transferring annual leave to subsequent years
The amendment to the Labor Code enables the transfer of the above-standard part of the annual leave (entitlement higher than 4 weeks) to the next year. It will be sufficient that both parties are interested in it and that a request and an agreement will be in place.
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You can download our newsletter in English and Czech here:
personal-tax-changes-in-czechia-2021-ps-cz-sme-info-2021-01.pdf
The purpose of SME INFO is to provide general information and to draw the attention to the current changes in law which we believe to be important for the business operation of our clients. It is not a replacement for careful review of the acts and rules and the consultation with your tax advisor.
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