TAX BILL 2021 (CZ)

Dec. 22, 2020 Czech Republic

The tax revolution is the tax bill for next year, which was approved by the Chamber of Deputies. It must be approved by the Senate and subsequently signed by the President. Pay attention to the changes that should apply from 1 January 2021, provided that the legislative process is successfully completed without further changes.

Abolition of the super-gross salary
Taxation on the so-called super-gross salary. If the Senate approves the tax package, then from 1 January 2021, only the gross salary of the employee will be used for the calculation of the tax, without taking into consideration the insurance premium paid by the employer. This change would therefore be reflected only on the amount of income tax.

Higher discount per taxpayer
The Senate further adjusted the increase in the taxpayer allowance to CZK 27,840 in 2021 and to CZK 30,840 in 2022.

Change in the solidarity amount of tax
The tax rate of 23% was newly approved. This should be applied to the part of the tax base exceeding 48 times the average wage (CZK 141,764 per month). The current wording of the Act provides for a joint and several tax increase only for persons who have income from employment (income pursuant to Section 6 of the Income Tax Act) or self-employed activities (income pursuant to Section 7 of the Income Tax Act). However, the new tax rate of 23% will also affect taxpayers who have rental income or capital income.

Abolition of the tax bonus maximum
The tax bonus arises when applying a tax benefit (discount) to children in an amount exceeding the calculated tax. Until now, families with more children have been able to claim a tax bonus of up to CZK 60,330 per year. This limit has been abolished as part of the approved tax package.

Meal package
From January, this will offer employers a tax-reduced meal allowance package as a simple and cheap alternative to meal vouchers. Employers will now be able to provide a meal allowance in cash. According to the new wording of the law, the cash contribution provided by the employer to employees for meals is considered as exempt income up to 70% of the upper limit of the meal allowance, which can be provided to employees remunerated for a 5 to 12 hour business trip.

Restrictions on the exemption of income from the sale stock options
In the case of the sale of stock options (eg shares or bonds) after three or more years, the exemption of income from the sale applies regardless of the amount of income. However, this exemption should now be limited to revenues of up to CZK 20 million per year. In the case of income from the sale of securities exceeding this limit, only the above-mentioned part of the income will be exempt. According to the current wording of the proposed transitional provisions, this new limit should apply to all sales of securities, regardless of whether they were acquired before or after the amendment came into force.

Should you wish to discuss the above, please contact our experts:

Klára Cowan
Head of Payroll
ASB Czech Republic