Další plánované změny u dohod o provedení práce od 1. 1. 2025

Further planned changes to work performance agreements from 1 January 2025

At the end of last week, an amendment proposal was published which would change for the third time the regime for taxation and payment of social security and health insurance premiums on income from work performance agreements (known as “DPP” in Czech)) from 1 January 2025.

The newly proposed changes respond to data obtained from the compulsory registration of DPPs with the Czech Social Security Administration (CSSA) for the period from July 2024. The registration to date has shown that the already approved legal changes, in particular the so-called notified agreement regime (more detailed information available HERE), would not change the volume of wage payments from DPPs not subject to social security and health insurance premiums much compared to the current situation. At the same time, the introduction of the notified agreement regime would bring significant additional administration for both employers and the social security administration.

The proposed amendment fully abolishes the notified agreement regime and reverts in part to similar principles that apply now until the end of 2024. The main changes are set out below:

• The compulsory registration of agreements with the CSSA will continue to apply to employers.
• An employee's monthly income from a DPP should now not be subject to social security and health insurance contributions if the total income from one employer does not reach the applicable amount for participation in sickness insurance. The decisive amount will be set at 25 % of the average wage (for 2025 this is CZK 11 500).
• The same limit (i.e. income below 25% of the average wage) should be relevant for application of the withholding tax on income from the DPP (subject to other conditions set out in the Income Tax Act).

We will keep you informed about further legislative developments of the amendment.

Author:

Radka Růžičková