Increase of minimum wage in the Czech Republic from January 2018 – what is its impact?

In August, the Czech government approved an increase in the minimum wage from the current CZK 11,000 to CZK 12,200 (for a 40-hour working week). The minimum hourly wage will increase to CZK 73.20. This change is effective from January 1, 2018. In addition to the positive impact on employees, the value of the minimum wage affects also other points:

• The maximum amount of the possible tax allowance for nursery-fees will increase to CZK 12,200 (for the year 2018 it will be possible to apply in 2019).
• The tax payer’s annual income, which is a prerequisite for entitlement to the payment of the tax bonus in respect of dependent children, will increase 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 will be 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, will increase to CZK 1,647 / month (13.5% of the minimum wage).