New developments in payroll-related matters in 2018
Dear clients, We provide you with a brief overview of changes and new developments in payroll effective in 2018.
Minimum wage increased
- The minimum monthly wage for full-time employment has been increased from the current CZK 11,000 to CZK 12,200 and the minimum hourly wage has been increased from CZK 66 to CZK 73.20.
Maximum assessment basis for 2018
- The maximum assessment basis for social security is CZK 1,438,992 in 2018.
- The threshold from which solidarity tax applies is CZK 119,916 in 2018.
Sickness benefits and wage compensation increased
- Sickness benefits and wage compensation have also been increased with effect from 1 January 2018, including an increase in the reduction limits for wage compensation. As a result, a higher portion of the employee’s earnings will be applied.
- Wage compensation and sickness benefits paid to employees on a long-term sick leave have been increased with effect from 1 January 2018.
New sickness benefits
- Paternal postnatal care benefit effective from 1 February 2018.
- Long-term nursing care benefit effective from 1 June 2018.
- Both benefits may be claimed by employees as well as sole traders who pay sickness insurance.
With effect from 1 January 2018, the minimum assessment basis for health insurance payments has been increased to CZK 1,647.
Child tax credits
- One of the most significant changes is the increase in the tax credit for a first child by CZK 140, i.e. to CZK 1,267 per month. The tax credits for a second and s third child were amended in 2017.
Higher maximum tax credit for kindergarten children
- The increase in the minimum wage has resulted in an increase in the maximum possible tax credit for a child attending kindergarten. In 2018, the maximum deductible amount is CZK 12,200, compared to CZK 11,000 in 2017.
Tax credits and reliefs
- The tax credit for non-remunerated donation of blood and its components has been increased to CZK 3,000.
- The tax credit for non-remunerated bone marrow donation has been increased to CZK 20,000.
- Higher tax benefits apply to pension and life insurance contributions paid by employees. Employees may deduct up to CZK 24,000 as part of their annual tax credit for each type of employee insurance contributions. This applies to annual statements for 2017.
Taxpayer’s statement in electronic form
- From 2018 employees may fill in and sign the taxpayer’s statement form electronically.
- Try PAYMINATOR – our easy online solution.
Maximum earnings – Employment Authority
- The maximum possible earnings a person attempting to find employment may earn without being struck off the job applicant register is CZK 6,100 per month in 2018.
Changes in personal data protection
- On 25 May 2018 the General Data Protection Regulation will come into force that will supersede, amend and tighten current legislation.
Changes in employment of persons with disabilities
- An electronic registration of alternative performance for employing disabled persons has been introduced and new requirements have been imposed on suppliers and customers that will apply to performance provided in 2017.
Allowances for damaged health
- Concurrently with pensions, allowances for damaged health have also been increased. These are provided to employees in compensation for the loss of earnings due to an occupational injury or disease.
Increase in the reimbursement for fuel costs – average fuel costs applicable in 2018
- Diesel fuel = CZK 29.80
- Natural 95/ Super 95 = CZK 30.50
- Natural 98/ Super 98 = CZK 32.80
Travel and subsistence expenses
- Changes have also been made to subsistence expenses reimbursed by the employer to employees sent on business trips outside the Czech Republic. The increase in the reimbursement for subsistence expenses applies to eight countries.
- Employers in the private sector must pay employees on domestic business trips minimum subsistence contributions of:
- CZK 78 (CZK 72 until 31 December 2017) for business travel for a period from 5 to 12 hours;
- CZK 119 (previously CZK 109) for business travel for a period exceeding 12 hours up to 18 hours;
- CZK 186 (previously CZK 171) for business travel exceeding 18 hours.