Taxes Chamber of deputies: proposal to abolish notified agreement scheme
The planned introduction of a ‘notified agreement’ scheme for agreements to perform work outside employment is likely to be cancelled. A proposal has also been submitted in the chamber of deputies to abolish mandatory social security and health insurance contributions from unnotified agreements exceeding the threshold for small-scale employment. Another proposal relates to income tax and amends the conditions for withholding tax on income from agreements to perform work.
From January 2025, changes to sickness insurance relating to notified agreements were to be launched. However, proposals to abolish this regulation have been filed during the discussion of a draft amendment to the Employment Act and other laws in the chamber of deputies, currently subject to the second reading. The reason for this is the expected minimal impact on income from insurance relating to agreements to perform work, which became evident from the data for the first two months of the agreement notification obligation. The legislators thus want to first evaluate statistical data over a longer period. The notification obligation for agreements to perform work, introduced in July 2024, will remain in place to monitor the volume and structure of such agreements in the long-term.
Another amending proposal also modifies the related income tax area. It proposes that withholding tax on an agreement to perform work should only be applied if the income does not reach the relevant threshold for participation in sickness insurance. The threshold for participation in sickness insurance is likely to be calculated annually as 25% of the average wage, as originally envisaged for notified agreements. If this proposal is passed, this threshold for agreements to perform work would thus be CZK 11,500 in 2025.
The chamber of deputies will decide on the above amending proposals in the coming weeks.