2018 brought five main changes to employee taxation in the Czech Republic: Increase of the minimum wage, tax exemption of employee benefits expanded, new deductible item for bone marrow donation, increase of the tax credit per the first dependent child from 2018 and new paternity leave regulation.
Curious about the employment taxation changes in other countries from CEE? Download our eBook “Summary of the most significant changes affecting employment taxation in 5 CEE countries, 2018” where we gathered the most significant changes affecting employment taxation in the Czech Republic, Hungary, Poland, Romania and Slovakia!
1. Increase of the minimum wage
Since January 1st 2018 the minimum wage was increased from CZK 11,000 to CZK 12,200. Accordingly,
- the maximum amount of the possible tax allowance for nursery-fees was increased to CZK 12,200 (for the year 2018 it will be possible to apply in 2019),
- the tax payer’s annual income was increased to CZK 73,200 (6 times the minimum wage). It should be noted that it now concerns only the income from dependent and self-employed activity (not from rent or capital),
- the limit for exemption from payment of regular contributions in respect of pensions was increased to CZK 439,200 / year (36 times the minimum wage), i.e. CZK 36,600 / month,
- the health insurance, which must be deducted from the minimum wage e.g. by the tax-exempted persons, was increased to CZK 1,647 / month (13.5% of the minimum wage).
To understand better these changes and for simulation purposes, you can check the 2018 salary calculator for the Czech Republic.
2. Tax exemption of employee benefits expanded
Tax-exempt status will now also apply to printed books, including children’s picture books, except books containing more than 50% of advertising.
3. Changes of the deductible item for blood donation and bone marrow donation
Increase of the item deductible from the tax base for each blood donation from CZK 2,000 to CZK 3,000. Also, the taxpayers may reduce their tax base by CZK 20,000 for each donation of hematopoietic cells. The tax savings in this regard may be up to CZK 3,000.
4. Increase of the tax credit per the first dependent child from 2018
Increase of the tax credit per the first dependent child from 2018 (CZK 13,404 in 2017 / CZK 15,204 in 2018). The tax credit per second, third and subsequent dependent child (living with taxpayer in the common household) was increased already in July 2017.
5. New paternity leave regulation
The new paternity leave regulation allows fathers to have 7-days paid leave, during the first six weeks after the birth, adoption or fostering of a child. The amendment to the Sickness Insurance Act officially entered into force on February 1st, 2018 and allows the fathers to claim up to 70% of their salary for seven calendar days of leave.
