Zákon o jednotném měsíčním hlášení zaměstnavatele - pozměňovací návrhy

In connection with the proposed Employer's Unified Monthly Reporting Act, which we informed you about HERE and HERE, related amendments have been submitted in the Chamber of Deputies.

Without assessing the chances of individual amendments being adopted, we were particularly interested in the following points:

• If an individual who is a Czech tax non-resident and simultaneously a member of the body of a Czech legal entity with income exceeding 36 times the average wage in a given year (currently the threshold for the 23% tax rate), they will be required to submit a standard personal income tax return.
• Given the inconsistency in the approach of tax administrators (more information from the financial administration HERE), it is proposed to directly amend the law so that in the case of an individual, a Czech tax resident, their Czech employer does not have to withhold income tax advances in the case of so-called international hiring out of labor from income which according to the applicable international double taxation treaty is subject to taxation abroad.
• Amendment of the exemption for employee benefits regulated in § 6 para. 9 letter d) of the Income Tax Act, so that it explicitly must be benefits that "are not wages, salaries, remuneration, compensation for lost income, or other benefits related to work performance." This is a response to cases of so-called "salary swap," where the employee effectively receives part of the remuneration for work performance in the form of the mentioned non-monetary benefits with a more favorable tax regime.
• Two amendments are against the intended abolition of withholding tax to prevent unnecessary administrative burden on low-income groups, especially employees with irregular or occasional income.
• Increase in tax benefits for dependent children, the so-called "child allowance." For the first child, the annual allowance would be 25,204 CZK (instead of the current 15,204 CZK), for the second child 42,320 CZK (instead of 22,320 CZK), and for the third and subsequent children 57,480 CZK (instead of 27,840 CZK).

Certainly, the most interesting point is the amendment of the exemption for benefits only in situations where it is not remuneration tied to work performance. If the new amendment is approved, it will be necessary to evaluate the setup of so-called Cafeterias and other benefit systems that employers have.

We will keep you informed of further developments. If you have any questions, please contact the authors of the article or the EY advisory team.

Authors:

Adam Linek

Jan Kouba