Changes in payroll accounting from 1 January 2015

Changes in annual tax statements for 2014

• Under the new rules, tax returns must only be filed by those employees who paid solidarity tax in 2014 and, at the same time, reached the maximum assessment base for social security
• Employees may claim in their annual tax statement the “kindergarten fee”, which is a fee for placing a child in a preschool facility, including kindergarten
  • This is a tax relief reducing the tax base
  • The threshold is CZK 8,500 for 2014 and CZK 9,200 for 2015;
    • To claim the tax relief, a certificate issued by the preschool facility must be submitted and the enclosure to the taxpayer’s statement must be filled in (available in Czech at http://www.financnisprava.cz/assets/tiskopisy/5457-1_1.pdf)

Changes in claiming child tax benefits for 2015

• New rules apply to tax child credits and monthly bonuses
• Tax child credits have been differentiated by the number of children eligible as dependents
  • Monthly tax credits:
    • first child CZK 1,117
    • second child CZK 1,317
    • third child CZK 1,417
• The order of the children need not be based on the date of birth. The parents must agree upon who is going to claim the tax credit on which child as well as upon the amount to be claimed on the child
• To claim the tax credits, the following documents must be provided with January payroll:
• Filled in tax statement form no. 24 (available at http://www.financnisprava.cz/assets/tiskopisy/5457_24.pdf)
• A confirmation issued by the other parent’s employer must be provided with the above tax statement (the template form is available at http://www.financnisprava.cz/assets/tiskopisy/5556_1.pdf)

Changes in life insurance effective since January 2015

• Stricter requirements for tax-exemption applicable to employer contributions to private life insurance
  • Tax exemption no longer applies if the employee is allowed under the policy to withdraw contributions made by the employer
    • Before expiry of 60 calendar months from execution of the policy, or
    • Before the year in which the insured person reaches 60 years of age for payment of the insurance benefit
• Amendment to the policy must be substantiated by a certificate from the insurer; otherwise the employer contribution will be taxed.

Taxation of executive directors’ income

• In respect of tax non-residents, the income of executive directors in limited liability companies (s.r.o.), governing directors of joint-stock companies (a.s.), directors of benevolent societies and board members is now subject to withholding tax; the officers may not sign the taxpayer’s statement.

Minimum wage

• The minimum wage has been increased to CZK 9,200 per month. This does not apply to persons receiving invalidity pensions; their minimum wage remains at CZK 8,500 per month.
• As a result of the change in the minimum wage, compensation for extraordinary working conditions is increased to 10% of the minimum wage for one hour of work.

Health insurance

• Insurance is no longer levied on unpaid leave, even in the case of unexcused absence; however, the employer must ensure compliance with the employee’s minimum assessment base or a pro-rata part if the employee is subject to the mandatory minimum.

Other changes

• Interest-free loans – the terms for granting interest-free loans have been amended; since January 2015, a threshold has applied to the principal of up to CZK 300,000; the benefit at the level of fair market interest is taxed as income from employment and is only calculated from the amount exceeding the threshold
• Pensions exceeding CZK 840,000 a year will again be subject to income tax
• The threshold on the maximum assessment base for social security is increased to CZK 1,277,328.