Czech Republic

Registrations and Establishing an Entity

To process payroll, a company must be registered in the Czech Republic. This includes obtaining a social authority employer number, tax registration for payroll taxes, employee registration with a health insurer, and a corporate tax number. Processing takes up to two weeks depending on the authority.

Banking

Payments to authorities must be made from a Czech bank account. Bank branches are typically open 09:00–17:00 on weekdays, with extended hours in larger cities.

Working Week

The working week runs Monday to Friday, with 40 hours as the norm. Standard office hours are 09:00 to 18:00.

Employment Law

Holiday Accrual
Employees are entitled to at least 20 working days (160 hours) of annual leave. Holiday pay is based on the average salary from the previous quarter.

Maternity Leave
Maternity leave is 28 weeks (37 for multiple births), starting 6–8 weeks pre-birth. It is State-funded. Parental leave extends to 3 years of age.

Paternity Leave
Paternity leave is 14 days and must be taken within 6 weeks of birth or placement. Fathers receive up to 70% of their salary via sickness insurance.

Sick Leave
For the first 14 calendar days, employers pay 60% of the employee's salary for working days only. Thereafter, the State assumes responsibility.

National Service
There is no compulsory national service in the Czech Republic.

Tax & Social Security

The tax year runs from 1 January to 31 December.

Income Tax
Monthly income tax is due by the 20th of the following month. Employees pay:

• 15% on income up to CZK 139,671
• 23% on income above this threshold

A personal allowance of CZK 2,570 per month applies.

Social Security Contributions

Employers may contribute up to CZK 50,000 annually to private pension accounts tax-free.

Payroll

Electronic payslips are permitted with employee consent. All salary payments and tax filings must be in CZK. Employers must archive payroll and pension records for 45 years.

Reports

Payroll reports are submitted monthly to health and social insurance authorities. Year-end reports include income tax statements and pension records. Additional quarterly accident insurance calculations may apply.

Reporting

Companies must be licensed and authorised to submit filings on behalf of clients. A power of attorney is required for tax and social security submissions.

New Employees

Employees must be registered within 8 days of starting. EU nationals provide registration confirmation; non-EU nationals must obtain a work permit and visa. Expat hires must also declare health insurance coverage.

Leavers

Redundancy payments are exempt from insurance contributions. Final salary must be paid by the usual payday. Termination due to organisational changes entitles the employee to:

• 1 month’s salary (<12 months)
  
  
• 2 months’ salary (12–24 months)
  
  
• 3 months’ salary (>24 months)
  
  

Authorities must be notified upon termination.

Employee Benefits

Non-cash benefits are tax-exempt up to CZK 23,278.50. Health-related benefits have a separate cap of CZK 46,557. Superannuation contributions up to CZK 50,000 are not taxed. A daily meal allowance of CZK 123.90 is tax-exempt for one shift.

Expenses

Private use of company vehicles is taxed at 1% of the vehicle value per month. Low- and zero-emission vehicles have reduced rates (0.5% or 0.25%). Mileage and fuel may be deducted, subject to VAT. Travel-related reimbursements are tax-free when based on official documentation.

EU/EEA/Swiss citizens may work without a permit but must register. Non-EU citizens require a work permit before applying for a visa. Documentation includes a passport, contract, and registration of social and health insurance. Some categories, such as researchers or internal transfers, may be exempt.

Czech social authority jurisdiction is now based on regional office capacity, not business registration location. Employees may select from seven health insurers. Employers with 25+ employees must employ 4% disabled persons or pay a levy. Mandatory electronic communications with government offices apply to registered businesses.

Further Information

For more information, or assistance with Czech Republic Tax inquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.