Payroll Newsletter - Autumn 2017
Tax changes, news, practical information
Minimum wage increase from 1 January 2018
Starting from 1 January 2018, the minimum wage will increase by CZK 1,200 to CZK 12,200, the minimum hourly wage will increase to CZK 73.20. In relation to this, the lowest levels of guaranteed wage will also be adjusted for employees whose wages are not arranged in collective agreements and for employees in public services and administration to CZK 12,200 – CZK 24,400 (eight groups based on complexity, responsibility and strenuousness of the work performed).
Job seekers and non-colliding employment
On 29 July 2017, Act No. 206/2017 Coll. came into force, changing among other things the Employment Act. Among other things, the amendment excludes labour relations based on agreements to complete a job from so-called non-colliding employment. An employer and a job seeker who does not receive unemployment or requalification allowance can therefore enter only into an employment contract or an agreement to perform work. Wages, salaries and remuneration still must not exceed half of the minimum wage.
Job seekers who have been performing non-colliding employment under agreements to complete a job must select one of the following options by 29 October 2017: 1. Terminate such employment; 2. Conclude another type of labour relation; or 3. Ask to be deregistered from the Labour Office records.
Income from dependent activities taxed by deductions – change
Starting from 1 January 2018, the current treatment of tax collected in the form of a deduction under a special rate as part of income from dependent activities is expanded to include income in the aggregate amount not exceeding CZK 2,500 from the same employer per calendar month, provided that the employee did not sign/make a tax declaration with this employer. This concerns, for example, the function of a member of an electoral committee, income from small-scale employment, agreement to perform work with gross income up to CZK 2,500 or income from providing testimony to the police. This income is therefore treated similarly to agreements to complete a job up to CZK 10,000.
The taxpayer will retain the option to include the withheld tax on the above income in the annual tax in the tax return.
Increase of the allowance for blood donation for the purposes of the non-taxable part of the tax base
An amendment to the Income Taxes Act effective from 1 August 2017 changes the non-taxable part of the tax base. The amendment adjust the allowance for donation of blood and its components from CZK 2,000 to CZK 3,000. The value of one donation of haematopoietic cells can now also be deducted from the tax base (with the exception of documented travel costs related to the donation), valued at CZK 20,000. It is important to note that these amounts can be deducted already in the 2017 taxation period, i.e. in the tax reconciliation for 2017 or in the tax return for the same period.
Increased rates for the calculation of sickness allowance
Starting from 1 January 2018, the rates for the calculation of sickness insurance allowances increase. From the 31st calendar day of a temporary inability to work (hereinafter "TIW") or quarantine, the rate will now increase from 60% to 66% of the daily assessment basis and from the 61st calendar day of the TIW or quarantine the rate increases from 60% to 72% of the daily assessment basis.
Other allowances (sickness allowance from the 15th to the 30th calendar day of the TIW, caregiver's allowance, monetary help in motherhood) remain unchanged.
Paternal post-birth care
The paternity allowance is a new contribution from the sickness insurance system and will come into force on 1 February 2018. It can be used by men recorded as fathers by the register office and those accepted as surrogate parents by the court, provided that they participated in the sickness insurance system for at least three months immediately preceding the start of the paternity leave. The allowance can be obtained in the period of six weeks of the birth or taking into care of the child (in the latter case up until the child's seven years of age). In accordance with transitional guidance, the paternity allowance will also be applicable for children born or taken into care on or after 21 December 2017.
The maximum duration of paternity leave is one week and it cannot be interrupted. The amount of this allowance is the same as monetary help in motherhood, i.e. 70% of the daily assessment basis. The claim for the payment of the paternity allowance can be made using a specified form.