Be prepared for changes in payroll accounting

With effect from 1 January 2014, payroll accounting will also be affected by numerous changes, which include a change in payroll limits or payments of compensation.

Changes in payroll limits:

  • The maximum assessment base for social security payments will be CZK 1,245,216;
  • The annual threshold for application of the solidarity tax increase will be CZK 1,245,216;
  • The monthly threshold for application of the solidarity increase in tax advances will be CZK 103,768.

Changes in the periods of wage compensation and sickness pay

For two years, employers have paid wage compensation to their employees for the first three weeks of sickness leave. Companies whose employees will be off sick for a period longer than 14 days will save money from January 2014. The Ministry of Labour and Social Affairs will return to the original practice in which only two weeks of sickness leave were paid to employees by employers “with their own money” and a longer period of sickness leave was paid by the state. The benefit derived by companies in the form of a lower sickness insurance rate will remain. From 1 January 2014, employees will be entitled to sickness benefits from the 15th day of sickness leave and to wage compensation only for the first 14 days of the sickness leave. This change will only apply to insured employees who become incapable of working after 31 December 2013. If the work incapacity continues from 2013 into 2014, wage compensation is provided for the first 21 days and sickness benefits from the 22nd day of the sickness leave. Another important change is that the threshold for applying the final withholding tax will be increased in the case of taxpayers who did not sign the PIT statement from CZK 5,000 to 10,000 per month. The withholding tax may only be applied to income arising from agreements to complete a job (“dohoda o provedení práce”), thus unifying the requirements for exemption relating to social security and health insurance. Please do not hesitate to contact our payroll department if you have any questions.