Single monthly employer reporting and related changes to income tax
In the beginning of March 2025, the government approved a bill on single monthly employer reporting (in Czech Jednotné měsíční hlášení zaměstnavatelů or JMHZ), which the Ministry of Labour and Social Affairs wants to launch from 2026. It should reduce the administrative burden for businesses as regards their employees: today's 25 reports to various institutions (social security administrations, labour offices, the Ministry of Labour and Social Affairs, the Czech Statistical Office and tax administration authorities) will be replaced by one, to be filed by the employer within a single deadline. This will eliminate the multiple collection of repetitive data.
We reported on the bill in December 2024 in our article titled Proposal to simplify administration - single monthly employer report.
Along with the bill, a proposal to amend related laws that impose information obligations on employers vis-à-vis government authorities has been submitted to the chamber of deputies, including an amendment to the Income Tax Act.
Proposed amendment to the Income Tax Act
With effect from 1 January 2026, it is proposed to abolish withholding tax on remuneration paid to corporate body members who are individuals and Czech tax non-residents. Withholding tax will only remain for legal persons exercising the office of a member of a corporate body. This will eliminate the inequality in taxation of individuals based on their tax residence.
With effect from 1 January 2027, it is further proposed to fully abolish withholding tax on income from dependent activity. This change will affect income from agreements to perform work (outside employment) whose aggregate amount with the same employer in the calendar month does not reach the threshold for participation in sickness insurance, and income from small-scale employment (e.g. income from agreements to carry out a job or from remuneration for exercising an office whose monthly amount does not reach the threshold for participation in sickness insurance, etc.) where the individual did not sign a declaration of a taxpayer liable to personal income tax from dependent activity.
For taxpayers with income from dependent activity, it is proposed to introduce the obligation to file a tax return unless they ask their employer to make the annual settlement of tax prepayments. For individuals who are Czech tax non-residents and receive remuneration as members of corporate bodies, this obligation should apply only if their aggregate annual income from remuneration for exercising the office in the Czech Republic exceeds 36 times the average wage.
In the second phase of the single monthly employer reporting project, it is planned to introduce a new service: the pre-filling of tax return forms using information obtained from the single monthly employer reports.
The bill on single monthly employer reporting was submitted to the chamber of deputies for debate on 11 March 2025.