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On 26 September 2022, the Government of the Czech Republic issued Decree No. 290/2022 Coll., in which it set the new average wage for the year 2023 reaching CZK 40,324. The average wage affects the following levy obligations for individuals.
The progressive personal income tax rate of 23% applies to the portion of the tax base that exceeds 48 times the average wage for the taxable period. In 2023, income exceeding CZK 1,935,552 will be taxed using the progressive tax rate. The monthly settlement is based on 4 times the average wage, so income exceeding CZK 161,296 will be subject to higher taxation in 2023.
The calculation procedure for determining the maximum assessment base is the same as for calculating the limit for progressive taxation. For 2023, the annual limit for social security contributions is CZK 1,935,552. There is no obligation to pay additional social security contributions on the assessment base above this threshold.
The obligation for employees to participate when performing small-scale employment sets a limit of CZK 4,000, calculated for 2023 as one tenth of the average wage rounded down to the nearest five hundred korunas. This means that it is not necessary to make a tax declaration for monthly wages up to and including CZK 3,999.
The new amount of minimum deposits for self-employed persons for 2023 is CZK 2,944 for pension insurance and CZK 2,722 for public health insurance.
On 21 December 2022, the Government of the Czech Republic approved an increase in the minimum wage by CZK 1,100, so from 2023 the minimum wage will be CZK 17,300.
The setting of a new minimum wage in 2023 has affected certain areas of the Income Tax Act as follows:
Author: Roman Burnus, Marek Toráč
Lenka Kočerová | 8.10.2024
SAC: Liability of members of elected bodies for tax debts of a legal entity
