TAX ALERT : THE END OF A SUPER-GROSS WAGE AND OTHER TAX CHANGES FOR THE YEAR 2021

TAX ALERT

THE END OF A SUPER-GROSS WAGE AND OTHER TAX CHANGES FOR THE YEAR 2021

Last week, on November 20th, 2020, was approved the tax package for year 2021 by the Chamber of Deputies. Deputies proposed to cancel the super-gross wage, to increase the tax relief to taxpayer and several other changes summarized below. The new tax adjustment should be effective from January 1st, 2021. Now the tax package needs to be approved by the Senate.
1. The end of the super-gross wage
From January 2021, it´s proposed to cancel the so-called super-gross wage. The proposal is to preserve the tax rate of a personal income tax rate of 15 % which will be from this date calculated from gross wage. The so-called solidarity surcharge will be replaced by the second increased rate of 23 %. At this rate will be taxed all income over CZK 141 764 per month. This amount represents 4 times the average wage in 2021.
 
2. Growth of tax relief to taxpayer
From the next year, the basic tax relief to taxpayer should be derived from the average wage for the previous year. The proposal increases this relief to CZK 34,125 per year. However, it is likely that this proposal will not be approved due to a large revenue shortfall.

3. Flat amount for meal vouchers
From next year, employees will be allowed to obtain money instead of paper meal vouchers. In the proposal, the monetary meal allowance is exempted up to 70% of the upper limit of the meal allowance for a business trip lasting 5 to 12 hours per one shift. Such a contribution up to the set limit is not subject to social and health insurance either. For the employer, a meal allowance is a tax-deductible expense.
 
4. Simplification of the notification obligation
For income that is liberated or not taxed in the Czech Republic, according to the relevant double taxation agreement, it is proposed to increase the limit amount for the notification from the current CZK 100,000 to CZK 300,000. Taxpayers will not need to report monthly, but only once a year, always by the end of January of the following year.
 
5. Taxation of bond income
Tax changes also revoke the exemption of interest income from bonds for non-residents. In order to maintain the same business conditions, foreign investors will tax the income from bonds issued by Czech companies abroad.
 
Other proposed changes for the year 2021:
Flat tax  From 2021 it is proposed that the self-employed with an annual income of up to 1 mil. CZK could apply the so-called „flat tax“, which is for the year 2021 set at the amount of CZK 5,469 per month. The amount includes the income tax and also mandatory payments, such as health and social insurance, and thus aims in particular to reduce the tax administration to taxpayers.
 
Faster depreciation  For assets in the 1st and 2nd depreciation groups, which were acquired in the period from 1 January 2020 to 31 December 2021, it is proposed to reduce the depreciation period to one and two years, respectively, from the current three and five years. The threshold for the inclusion of technical improvement of assets should be doubled from CZK 40 to 80 thousand.
 
Real estate assessed according to the records in the Cadastral Office  From the Real Estate Tax Act It should now follow, that for the purposes of determining land tax are essential data stated in the real estate cadastre, regardless of whether it corresponds to the actual state.
 
Reduction of excise duty on diesel  The excise duty on diesel should to be reduced by one crown. For petrol the price remains in the same amount.
 
Support for electric cars on business trips  Expenses for the business trip by an electric car will be possible to prove by the so-called reference price of electricity. This amount is set to CZK 4.80 per kilowatt hour for this year.

Higher tobacco taxation   From 2021, the excise duty on tobacco products and heated tobacco products will increase. On the other hand, the tax on gambling will not be increased.
Rolovat nahoru