Changes to taxation of physical person

Removal of the limit for exemption of income tax from the sale of shares and stocks

As of January, the limit of CZK 40 million in relation to income from the sale of shares and securities with a statutory holding period has been removed. The limit will continue to apply to income from the sale of cryptocurrencies.

Taxation of employees

There are several changes in the area of employee taxation and related social security and health insurance contributions.

• Increase in the maximum annual assessment base for social security contributions to CZK 2,350,416 (so-called capping).
• Increase in the threshold for applying the 23% tax rate to annual income from CZK 1,762,812, i.e., income above CZK 146,901 per month.
• Increase in the decisive income for participation in sickness and health insurance for part-time work agreements ("DPP") to CZK 12,000 per month.
• Increase in the minimum monthly assessment base for health insurance for employees due to an increase in the minimum wage to CZK 22,400 for a 40-hour working week.
• Increase in the limit for tax exemption of so-called health and leisure employee benefits to CZK 48,967 for health benefits and CZK 24,483.50 for leisure benefits.
• Increase in domestic and foreign travel allowances and increase in the minimum basic allowance for the use of a personal motor vehicle on a business trip from CZK 5.80 to CZK 5.90 per kilometre.
• Reduction in the flat-rate reimbursement of expenses related to remote work, i.e., working from home, from CZK 4.80 to CZK 4.70 per hour.
• Increase in cash and non-cash contributions by employers to employee meals, which may be exempted up to 70 percent of the upper limit of meal allowances if other conditions are met, to CZK 129.50.
• Abolition of withholding tax on remuneration paid to members of statutory bodies who are not Czech tax residents and replacement with monthly advance payments for income tax. Income will thus be subject to progressive taxation with the obligation to file a tax return in the Czech Republic if the limit of 36 times the average wage is exceeded.
• Abolition of the obligation to withhold tax advances from employees hired abroad, subject to certain conditions.

Mandatory employer contribution to retirement savings products

A new law on mandatory employer contributions to retirement savings products has come into effect. It applies to employers whose employees perform hazardous work classified in the third category. If an employee requests it, employers must pay a mandatory contribution to their supplementary pension insurance or supplementary pension savings for these employees every month in which the employee works at least three shifts of hazardous work.

The employee must notify the employer in writing that they are exercising their right to a mandatory contribution and must also provide the necessary information for making the payment. The employer's mandatory contribution is included in the annual limit of CZK 50,000, which is exempt from income tax and social security and health insurance contributions for the employee. The employer must start contributing from the calendar month following the delivery of the employee's written notification. Contributions to a long-term investment product ("DIP") will not be considered as fulfilling this obligation.

The contribution is mandatory and amounts to 4% of the social security assessment base. Up to the amount specified by law, it is considered a tax-deductible expense for the employer. As usual, contributions above the limit specified by law are tax-deductible only if the entitlement to them arises from an employment or collective agreement or the employer's internal guidelines.

The employer must inform its employees of their right to the contribution and how to claim it before they commence hazardous work. The employer is also obliged to issue the employee with a confirmation of payment of the mandatory contribution. At the same time, they must keep detailed records of employees who have exercised their right to the contribution, shifts worked in hazardous work, the amount of contributions paid, and other data. The employer must archive the records for ten years and submit them to the regional social security administration upon request. Failure to comply with this obligation may result in a fine of up to CZK 2 million for the employer.

Government regulation to the employer's single monthly report

The unified monthly employer reporting system ("JMHZ") will be launched on April 1, 2026. The deadline for submitting the first monthly report for April is May 20, 2026. In this context, the Government Regulation implementing the JMHZ Act (No. 417/2025 Coll.) came into effect on January 1, 2026. It contains practical information on the introduction of JMHZ, including detailed specifications on what data employers will be required to provide and in what form.

The regulation specifies the reported data, its scope and disclosure to the relevant institutions, the period for which the data is reported, and the information in the employer and employee records. The regulation also specifies the format and structure of the submission, as well as the technical requirements for electronic data transmission and unambiguous identification of the submission.
We recommend updating payroll systems in a timely manner so that they contain the necessary information and are capable of creating data files with the prescribed content and structure.