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Taxes in Czech Republic

Employer Contributions in Czech Republic

Social insurance

Employers must make monthly contributions into the social security insurance of each employee at a rate of 25% of their gross salary, including benefits and allowances. The social security system funds pension (21.5%), unemployment benefits (1.2%), and sickness (2.3%). The maximum annual cap for the assessment base for calculation of contributions into the social security system is 48 multiplied by the average monthly wage per year (CZK 1,867,728 for 2022).

Health insurance

Employers must also make monthly contributions to the health insurance for each employee, at a rate of 9% of the employee’s gross salary, including benefits and allowances, with no cap existing. Minimum monthly base for employees is CZK 15,200 in 2021. This applies typically to employees with low or no renumeration, usually on a sabbatical.

Employee Contributions in Czech Republic

Residents of the Czech Republic are subject to tax on their worldwide income, whereas non-residents are subject to tax on the income generated only within the country. To be considered a resident, a person must spend more than 183 days a year in the country or have a home in the Czech Republic, in which they intend to stay permanently. According to Double Taxation Treaties, the permanent home available to the individual is essential. If the individual has a permanent home in both countries, DTT gives preference to the state with which the personal and economic relations are closer. Then the application of the habitual abode (183 days) applies. The tax domicile may change during the year, immediately after moving to the Czech Republic, with no need to stay 183 days in the Czech Republic.

Income tax

As of 2021, individuals are taxed a progressive tax rate based on all their types of income combined, including employment and passive incomes such as capital gains and rental income. Employers must withhold each employee’s employment income tax monthly and remit it to the tax authorities. Couples cannot file their income tax jointly.

Czech income tax 2021

Monthly Gross IncomeProgressive Tax Rate (%)
Up to CZK 1,867,72815
Over CZK 1,867,72823

In the Czech Republic, individuals employed get tax credits instead of allowances. You can find more information in the Tax-Free Allowance section.

Social insurance

During payroll, employers withhold and remit the employee’s mandatory contributions to the social security insurance monthly. The social security system finances old-age pension, sickness, and unemployment benefits. Employees contribute at a rate of 6.5% of their gross salary, including benefits and allowances, capped at CZK 1,701,168 annually. The maximum annual assessment base of CZK 1,867,728 for 2022 applies.

Health insurance

Employers are also responsible for withholding and remitting the employee’s mandatory contributions to the health insurance monthly. Employees contribute at a rate of 4.5% of their gross salary, including benefits and allowances. No cap. However, the minimum monthly base of CZK 16,200 in 2022 applies.

Benefits in kind

Benefits in kind are taxable income, except for a few minor exceptions. Benefits in kind are valued at open-market values, although a fixed rate of 12% per year applies to cars specifically, regardless if it’s for business or personal use.The provision of a car for both business and private use is considered a gross taxable income that equals 1% of the purchase price monthly.

Travel expense reimbursement in excess of a fairly low statutory limit (determined by the length of the trip and varying between CZK 99 and CZK 283) is also a taxable benefit for the employee. The 2022 minimum statutory limits are CZK 99 for local business trips 5–12 hours long, CZK 151 for trips 12–18 hours long, and CZK 237 for trips exceeding 18 hours per day. The amounts of CZK 99 – CZK 118 for local business trips 5–12 hours long, CZK 151 – CZK 182 for trips 12–18 hours long, and CZK 237 – CZK 283 for trips exceeding 18 hours per day are tax exempt (no employment income tax and no social security/health insurance contributions) and tax-deductible costs for the employer.

Certain non-monetary educational, cultural, sporting, and health benefits are non-taxable, with an annual limit of CZK 20,000.

The 2022 minimum statutory limits are CZK 99 for local business trips 5–12 hours long, CZK 151 for trips 12–18 hours long, and CZK 237 for trips exceeding 18 hours per day. The amounts of CZK 99 – CZK 118 for local business trips 5–12 hours long, CZK 151 – CZK 182 for trips 12–18 hours long, and CZK 237 – CZK 283 for trips exceeding 18 hours per day are tax exempt (no employment income tax and no social security/health insurance contributions) and tax-deductible costs for the employer.

If an employer provides an employee with temporary accommodation, it’s not taxable up to CZK 3,500 per month as long as the arrangement is structured well. If however, the benefit comes as a cash allowance, it is taxable.

As of 2022, employers may provide tax-exempt cash catering allowance up to CZK 82.60 per work shift. This benefit comes in addition to already existing meal vouchers or a company canteen as alternative forms of tax-advantaged catering support.

Tax-Free Allowance in Czech Republic

Tax credits and incentives

Unlike most countries, the Czech Republic has adopted a system of tax credits rather than tax-free allowances, as follows (2021):

  • General personal tax credit: CZK CZK 30,840
  • Dependent spouse tax credit: CZK 24,840 if the spouse lives with the taxpayer and does not have income in excess of CZK 68,000.
  • Child tax credit: CZK 15,204 for the first, CZK 22,320 for the second, and CZK 27,840 for the third and each following dependent child (under certain conditions). If the total tax is lower than the respective child credit, the taxpayer will receive a special tax bonus equal to the difference between the child allowances and one’s tax liability. As of 2021, there is no longer a maximum amount of tax bonus.
  • Deduction for placement of a child in a pre-school facility: Actual provable expenses up to the annual limit of CZK 15,200.
  • Disability tax credit: CZK 2,520, CZK 5,040, or CZK 16,140 (determined by disability severity).
  • Student tax credit: CZK 4,020 (for regular students up to 26 years old and university-level doctoral students up to 28 years old).

These tax credits lower the tax liability. Tax deductions modify the tax base only (reducing the liability by 15%–23% of the deduction only).

Employment expenses

No deductions are provided for expenses connected to taxable income from employment. However, reimbursements for travel expenses are exempt from tax, as long as they don’t exceed certain limits.

Personal deductions

Charitable contributions

Donations that finance science, education, culture, etc., are deductible for an individual if it’s between 2% (or minimum CZK 1,000) and 15% of the tax base (for 2021, the max limit was temporarily increased to 30% of the tax base).
Donating blood in the Czech Republic is also seen as a form of charitable donation. It’s valued at CZK 3,000 per collection.

Mortgage interest deduction

A deduction for the interest paid on mortgages is applicable under several strict conditions and is up to CZK 150,000 per year for housing needs “procured” after 1 January 2021, calculated on a monthly basis.

Life insurance premiums

A deduction for private contributions made on life insurance is applicable under certain conditions and is up to CZK 24,000 per year.

Private pension insurance

A deduction for private contributions made to a private pension insurance fund is applicable under certain conditions and is up to CZK 24,000 per year.

This page was last updated on 
22 September, 2022,
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