Amendment to the Income Taxes Act

27.01.2021

Since 1. 1. 2021, changes came into effect to the Income Taxes Act.

One of the important changes in this so-called „Tax package“ is the introduction of the flat rate tax. Self-employed persons can log in the flat-rate tax regime, under the conditions laid down by this Act, which means that they pay a constant flat-rate amount of 5,469 CZK/month (be valid for year 2021) for their income of up to 1 million CZK. This amount is created by income tax in the amount of 100 CZK/month, social insurance in the amount of 2,976 CZK/month and health insurance in the amount of 2,393 CZK/month. The flat-rate regime is in force only for self-employed persons, not to members of personal corporations.

The second very important change is in profit of employees, i.e., the abolition of the so-called super-gross salary. Until 31 December 2020, income tax was calculated on the so-called super-gross salary, which is income from dependent activity (gross salary) increased by the sum of employer corresponding to the social security premium and the contribution to the State employment policy and the public health insurance. Newly, the income tax will be calculated by the standard tax rate directly from the gross salary, i.e., which means Tax itself will be reduced, the net salary of all employees will increase by about 7%.