Payroll and dependent activities

Preparation of the employer's single monthly report

Apart from the adopted changes, we would like to inform you also about preparations that are underway in respect of a new proposed initiative - an employer's single monthly report. The purpose of the proposed change is to simplify the administrative duties of employees by ending the current requirement that 25 various regular monthly reports be submitted to authorities; instead, just one submission would be required. Under the suggested plan, a test run should start on 1 July 2025 and the project itself should start from 1 January 2026; if implemented, it would be mandatory for all employers.

Contract for work (the "CfW")

The widely discussed and criticised draft of an amendment which introduced the "regime of notified contract" has been revoked. Nevertheless, employers are obliged to report all CfWs to the social security authority.
Furthermore, as of 1 January 2025, income based on a CfW is no longer subject to health insurance and social security contributions if it does not exceed the amount of 25 per cent of the average wage in one calendar month per one employer - CZK 11,500 in 2025. The same limit applies to taxation of income with withholding tax.

New limits for health benefits

Until the end of 2024, the income tax exemption for leisure benefits for employees amounting up to one half of the average annual income was limited. Now, health benefits are also covered by an income tax exemption - namely, up to the amount of the average salary. In 2025, the limit shall be CZK 46,557. Benefits in this amount can be used for payments for healthcare products or services or similar (for example, premium medical care). Employers can still pay for vaccination, rehabilitation, vitamins supporting immunity or psychological treatment provided by medical facilities up to the given limit and without tax consequences for the employees.
Exemptions in respect of other benefits are still limited to the amount of half of the average salary, which is CZK 23,278 in 2025. Both limits should be recorded independently.
The limits for meal allowance are regulated by law apart from the other leisure benefits.

Provision of meals to former employees

Until the end of last year, the provision of meals to former retired employees was complicated because of the condition which stipulated that each employee had to work at least three hours in a given shift to be eligible (a condition that could not be met by) former employees. That is why an amendment has been approved (with a retroactive effect for 2024). The amendment clarifies that provision of meals to retired former employees by an employer is exempt from income tax.

Stock option plan

After almost a year of ambiguity, in 2025, the taxation of employee stock and option plans was returned to the regime that was effective before 2024 (taxation based on acquisition). Furthermore, the taxation of such income may be postponed to a future date (according to the rules effective from 2024) if the employer notifies the tax administrator of this before the 20th day of the calendar month following the month in question.

Social security

At the start of the year, a new social security regulation came into effect in respect of retired people who continue to work. Retired employees or self-employed persons may benefit from relief from pension insurance contributions in the amount of 6.5 per cent. If the retired person applies the relief, his net income shall increase.
The new maximum assessment base in 2025 is CZK 2,234,736 so - CZK 124,320 more than last year. Income that exceeds this limit is exempt from social security contributions.