Top six tax news items for employers and employees in 2017

Higher tax reliefs relating to both employer and employee contributions to employees’ supplementary pension insurance and life assurance schemes are already a given. Another increase in tax credits for dependent children is yet to be approved. Below you may find information about six extensive changes in taxation applicable to 2017.

  1. Employer contributions to an employee’s supplementary pension insurance or private life assurance scheme will be, on the part of the employee, exempt from tax up to CZK 50 000 a year, up from the current limit of CZK 30 000 a year. Moreover, employees contributing to these insurance schemes will be allowed to deduct CZK 24 000 a year from their tax base in respect of their supplementary pension insurance contributions and CZK 24 000 a year in respect of their private life assurance contributions. The limits currently in effect are CZK 12 000 a year per each type of supplementary insurance.
  2. Tax credits for second children should increase from CZK 17 004 to CZK 19 404 a year; tax credits for third and subsequent children from CZK 20 604 to CZK 24 204 a year. These increases in tax credits are part of a government bill currently being discussed to amend the Income Tax Act from 2017.
  3. A 15% income tax rate on the super-gross salary and a 7% solidarity tax surcharge remain applicable. The monthly limit for solidarity tax payments will increase to CZK 112 928.
  4. The maximum assessment base for social insurance premiums in 2017 will be CZK 1 355 136. A maximum assessment base for health insurance will continue not to be applied.
  5. An increase in the minimum wage to CZK 11 000 will also affect the amount of minimum monthly health insurance payments, which will increase to CZK 1 485.
  6. The tax credit for placing a child into pre-school facilities will increase to CZK 11 000 a year in line with the new minimum wage. This amount may first be applied in the 2017 wage tax prepayment settlement or employee income tax return.
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