The annual personal tax relief is CZK 24 840 (approx. EUR 902). In addition, tax relief of CZK 24 840 is granted for a spouse living in the same household with the taxpayer, unless the spouse’s annual income exceeds CZK 68 000 (approx. EUR 2 462). Additional personal tax relief of CZK 2 520 (approx. EUR 92) is granted for partially disabled persons and of CZK 5 040 (approx. EUR 183) for fully disabled persons. Tax relief of CZK 4 020 (approx. EUR 146) is granted to tax payers who are full-time students up to the age of 26 and tax relief of CZK 13 404 (approx. EUR487) is granted for the first, CZK 15 804 (approx. EUR 574) for the second, and CZK 17 004 (approx. EUR 617) for the third and each other dependent child. In addition, parents may apply for tax relief for children visiting the kindergarten of CZK 9 200 (approx. EUR 334) per annum. In case of the taxpayer’s tax liability having been fully covered by tax reliefs, the child tax relief can also be used as a child tax bonus. In this case, the tax bonus increases the employee’s net salary or is paid to the tax payer by the tax authorities. Taxpayers can also claim proportionate amounts of tax reliefs, with the exception of the taxpayer allowance, if the applicable conditions are met for part of the year only.
TAX COLLECTION The employer is obliged to operate monthly payroll, to calculate monthly payroll tax withholding, and remit the payroll tax withholding to the tax authorities. If the tax payer has only one employer at each time during the year and does not receive other income above CZK 6 000 (approx. EUR 218) (apart from income that is subject to the final withholding tax e.g. interests and dividends from the Czech companies), the tax payer is not obliged to file annual tax return. Consequently, the tax payer may ask the employer to perform annual tax reconciliation to apply tax base deductions or tax reliefs that cannot be applied within the monthly payroll (simplified annual tax filing). In other cases, the tax payer is obliged to file annual tax return. Also, if the tax payer’s income exceeds the annual threshold for solidarity tax, he is obliged to file annual tax return. The tax return for the respective tax period (calendar year for personal income tax) must be filed with the tax authorities by 1 April of the following year. The filing deadline may be extended until 1 July if the tax payer grants a power of attorney to a certified Czech tax adviser, or on the basis of a special application. Another extension of the tax return filing deadline until 1 November of the following year is available if the tax payer has income from abroad.
SOCIAL SECURITY AND HEALTHCARE INSURANCE PREMIUMS Employment income is subject to social security and healthcare insurance premiums. The assessment base for premium computation is derived from the employment income, where the assessment base is the sum of the income subject to personal income tax. The premium consists of a part to be paid by the employer and of a part to be paid by the employee. The payer of the premium is the employer, who withholds the premium from the employee’s monthly income. The employer pays both these parts to the social security and healthcare insurance authorities. The employer pays 25% of the assessment base as a social security premium and 9% of the assessment base as a healthcare insurance premium; 6.5% of their assessment base for social security and 4.5% for healthcare insurance are withheld from employees, members of statutory bodies and executives. A maximum annual assessment base5) is set for social security premiums. There is no maximum premium set for healthcare insurance contributions.For employees changing employment in the course of the calendar year or working for several employers simultaneously, the
62
2015/2016
maximum assessment base for social security premiums is calculated for each employer separately. If the amount of the employee’s social security premium exceeds the annual maximum, the employee may claim the return of the surplus after the end of the year. No premium overpayment arises to the employer. Employees coming from another EU country, or a country with which the Czech Republic has a bilateral treaty in the area of social security and/or healthcare insurance, may apply for an exemption from premium payment in the Czech Republic. On the basis of such an exemption, employees are not required to contribute to the social security and/ or healthcare insurance systems in the Czech Republic, but remain covered by their home social security and healthcare insurance systems. As a member state of the European Union, the Czech Republic is bound by the EU social security regulations (currently applicable to all member states of the European economic area and Switzerland) and other EU law. In addition, to prevent double social security contributions and to assure benefit coverage, the Czech Republic has entered into social security agreements with several non-EU jurisdictions, including Australia, Canada, India, Japan, Korea (South), Russian Federation, or the United States. MARTINA KNEIFLOVÁ ONDŘE J POLÍVKA Ernst & Young E-mail: Ondrej.Polivka@cz.ey.com
1) Residence (permanent home) is a place where the payer has a permanent residence, i.e. an apartment which is available to him/her at all times, whether owned by him/ her, or rented, and where the payer intends to be staying (depending on his/her personal and family situation). The apartment may be rented to another person, but only in a form enabling the payer its use according to his/her needs. 2) Or in connection with a previous, current or future performance of dependent activity, regardless of whether the activity is carried out for the payer of the income or not. 3) In general, 34% of income up to the amount of the social security premium from the maximum assessment base and 9% above this maximum assessment base. 4) In force as of 1 January 2013 going forward. Only gross income above CZK 1 277 328 (approx. EUR 46 364) in 2015 is subject to the solidarity surcharge tax of 7%. 5) For healthcare insurance premium, as of 1 January 2013, the annual ceiling is no longer applicable. For social security premiums, the annual ceiling amounts to 48-fold average wages; in 2015 it is CZK 1 277 328 (approx. EUR 46 364).