Features of personal income tax in the Czech Republic

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Personal income tax in the Czech Republic DPFO

DPFO

Personal income tax in the Czech Republic Daň z příjmů fyzických osob is 15% DPFO is paid in the Czech Republic from absolutely everything: from income from work in the Czech Republic, dividends in a company, income from deposits, shares, etc. 15% is paid in the Czech Republic also from the sale apartment if you have owned it for less than 5 years or have not lived in it right before the sale for less than 2 years. The income tax rate is 15% on income up to 1,867,728 CZK (from 2022) per annum and 23% on excess. Features of personal income tax in the Czech Republic.

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It is extremely important that in the Czech Republic in a huge number of cases people are exempted from personal income tax or they are given a discount:

  • Students who are employed temporarily.
  • People with low income.
  • Families in which at least one spouse is not employed.
  • Parents raising children (including families with children with disabilities).

All of them pay not 15%, but 15% minus various kinds of tax rebates. It can be said that different Czechs pay very different taxes, so in the Czech Republic salaries are indicated before taxes, the total amount on hand can be half that indicated in the ad, which is why Finance.cz salary calculators are popular.

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Increase in the minimum wage Zvýšení minimální mzdy

From January 1, 2022, the minimum wage will increase to CZK 16,200 per month. Based on this, the insurance payment for health insurance is also calculated.
People with a low income are exempt from personal income tax as such: with a salary of up to 10,290 kroons, personal income tax is not charged at all in the Czech Republic. If this amount is exceeded, 15% is paid only from the difference in excess, and not from the entire salary.

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Details worth knowing about the personal income tax in the Czech Republic, social and health insurance.

  • if less than 10,000 kroons are received from one employer per month, the employer pays 15% of personal income tax for you, you are exempt from paying social and health insurance;
  • if more than 10,000 kroons are received from one employer per month, the employer pays 15% of personal income tax for you, and about 30% of the income will go to pay them your health and social insurance.

Features of personal income tax in the Czech Republic

Features of personal income tax in the Czech Republic

When applying for a job, you may be given to sign “Prohlášení poplatníka DPFO ze závislé činnosti” – Statement of the DPFO taxpayer from a dependent activity or in short “Prohlášení poplatníka” – Declaration of the taxpayer. This document will allow the employer to apply discounts to the payment of your personal income tax, pay a deposit (and not the total amount of personal income tax) and therefore potentially your personal income tax will decrease, you will receive more money.
Discounts rely on low income, student status, children, disability, and more. Moreover, at the beginning of next year, you can get a certificate from your employer, file a declaration with the tax office, and you will probably get several thousand more back. The discount is provided and because this application is signed only with one employer at one time, you cannot have this application in parallel in several places.

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You are only required to file a tax return if you have worked in more than one place at the same time.

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Social and health insurance contributions

Pensions and medical care are not free, the state takes money for them from the mandatory social and medical contributions of working people. In the Czech Republic, universal medical care, any person will be provided with urgent assistance, and they will deal with payment later. Therefore, even housewives must pay contributions to the compulsory health insurance fund.
Of the holders of permanent residence in the Czech Republic and citizenship, pensioners, children under 18 and students under 26 are exempted from paying health insurance premiums in the Czech Republic. For working people, the employer deducts 13.5% from pay before taxes for health insurance, as well as 31.5% for social insurance (pension, sick leave, maternity leave). But that is why the Czech Republic has one of the best pension systems. A pension in the Czech Republic averages about 10,000 crowns and therefore allows you to live comfortably.

Features of personal income tax. Increase in the minimum wage in the Czech Republic Zvýšení minimální mzdy

From January 1, 2022, the minimum wage will increase to CZK 16,200 per month. Based on this, the insurance payment for health insurance is also calculated.

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