Three changes to employee taxation
Tax exemption of employee benefits expanded. New deductible item for bone marrow donation. Further increase in minimum wage in 2018.
Starting 1 January 2018, more employee benefits will be exempt from tax on income from employment: tax-exempt status will now also apply to printed books, including children’s picture books, except books containing more than 50% of advertising. As a standard, employers will have to provide the benefits in non-monetary form, for instance in form of a voucher for the purchase of books. The expense is then tax non-deductible for the employer.
The President of the Czech Republic has signed an amendment to the Income Tax Act that increases the item deductible from the tax base for each blood donation from CZK 2 000 to CZK 3 000. Also, from now on taxpayers may reduce their tax base by CZK 20 000 for each donation of hematopoietic cells. The tax savings in this regard may be up to CZK 3 000. Both deductible items can be applied in the tax return for 2017 already.
The government approved the Ministry of Labour and Social Affairs’ proposal to increase the monthly minimum wage. From 1 January 2018, it will be increased from the present CZK 11 000 to CZK 12 200. Accordingly, the minimum hourly wage will increase from CZK 66 to CZK 73.20. The government thus continues to implement the intention declared in its policy statement, i.e., to gradually increase the minimum wage so that it approximates 40% of the average wage. The increase will also affect the minimum health insurance premium payment for employees: where an employee’s settled income is lower than the minimum wage, the employer will have to calculate and pay additional amount to meet the statutory minimum premium, which is CZK 1 647 per month.