Important Updates in Accounting and Tax Regulations
Starting January 1, 2025, significant changes in payroll calculations, taxes, and social security contributions will take effect in the Czech Republic. Our professional accounting services will help your business stay compliant and avoid costly mistakes.
Key Updates for 2025:
1. Increased Reduction Limits for Sickness Benefits
The reduction limits for calculating sickness benefits and wage compensation for temporary incapacity or quarantine will increase as follows:
✔ First limit: 271.60 Kč
✔ Second limit: 407.40 Kč
✔ Third limit: 814.80 Kč
What does this mean?
The amount of sickness benefits will be recalculated, affecting both employers and employees.
2. Higher Maximum Assessment Base for Social Security Contributions
From January 1, 2025, the maximum assessment base for social security will increase to 2,234,736 Kč.
Impact on Businesses:
Employers must adjust payroll calculations to comply with the new contribution limits.
3. Changes in Income Tax Rates
✔ 15% tax rate will apply to income up to 139,671 Kč (3 times the average wage).
✔ 23% tax rate will apply to income exceeding this threshold.
Important for entrepreneurs and freelancers!
Higher-income earners will face increased tax burdens.
4. Increased Threshold for Participation in Social and Health Insurance
The threshold income for participation in social and health insurance and for taxation under a special tax rate will increase from 4,000 Kč to 4,500 Kč.
✔ New threshold for small-scale employment: From January 1, 2025, the limit for small-scale employment will be set at 4,500 Kč per month.
✔ If an employee’s monthly salary is up to 4,499 Kč, social insurance will not be deducted.
✔ This applies mainly to work agreements and remuneration for performing functions.
✔ If employees under a work agreement do not reach 4,500 Kč by January 1, 2025, they must be deregistered from health insurance using Code “O”.
✔ The threshold for withholding tax on dependent income has also increased.
5. Minimum Wage Increase in 2025
✔ Minimum monthly wage: 20,800 Kč (previously 18,900 Kč).
✔ Minimum hourly wage: 124.40 Kč.
✔ The increase applies even to employees receiving disability pensions.
How will this affect businesses?
- Higher labor costs for employers.
- Adjusted payroll and insurance contributions.
6. Increased Minimum Health Insurance Contributions
✔ The new minimum monthly health insurance contribution will increase to 2,808 Kč (previously 2,552 Kč).
Impact on Employers:
If an employee’s salary is below the minimum wage, the employer must cover the difference in health insurance contributions.
7. Changes in Tax Bonus Eligibility
✔ To qualify for a tax bonus, an employee’s monthly income must be at least 10,400 Kč (half of the minimum wage).
Why is this important?
- Employees earning less than 10,400 Kč per month will not qualify for a tax bonus.
- Employers should adjust payroll structures accordingly.
8. Adjusted Social Security Contributions for Certain Professions
✔ The employer’s contribution rate for social security will increase from 27.8% to 28.8% for:
- Emergency medical responders
- Members of enterprise fire rescue units
