Tax News 2019 – Summary
Updated: Mar 12
This article summarizes the most important tax changes and updates for 2019.
Minimum advances on social and health insurance.
The minimum social insurance advances increased to CZK 2,388 (increase by CZK 199) for main self-employment activities and CZK 955 for minor activities (increase by CZK 79). Advances for health insurance will rise to CZK 2,208 compared to CZK 2024 in 2018.
Payment of social insurance in the current month
In 2019 the deadlines for advances on social insurance will also change. The monthly deposit will no longer be payable by the 20th day of the following month but by the end of the month for which it is due. In January 2019, a deposit on social insurance will be due for January 2019
More favorable conditions for side activities
Social insurance does not have to be paid for minor self-employment activities if the gross profit falls within the annual limit, which is increasing from CZK 71,950 to CZK 78,476. However, in case the minor self-employment activity occurs only for a part of the year, the limit will be decreased accordingly. On the contrary, it is important to mention the health insurance must be paid even for a very low gross profit.
More advantageous earnings for DPČ
Working on a work agreement (DPČ) is a very popular way of gaining additional income. In 2019, earnings on DPČ will be more favorable due to the increase in the limit to which no social or health insurance is payable.
In 2019, it will be possible to earn up to CZK 2999 (CZK 2499 in 2018) per month without having to pay social and health insurance.
Furthermore, the limit for is assessed individually for each employer, so it will be possible to work simultaneously on a multiple work agreement and not to pay social and health insurance.
Solidarity tax on higher tax base
For the entire calendar year, incomes above a specified limit is subjected to a solidarity tax of 7 %. In 2019 this limit is increased to CZK 1,569,552 from the current CZK 1,438,992 due to increasing average wage. Social insurance does not apply on the amount of income subjected to solidarity tax. The current government wants to abolish the solidarity tax by 2020.
An entrepreneur had a gross profit of CZK 2,038,992 in 2018. His income exceeds the CZK 1,438,992 limit by CZK 600,000. The 7% solidarity tax is applicable only on those CZK 600,000 (600,000 x 7% = 42,000). With the same gross profit for 2019, the entrepreneur pays CZK 32,861 (2,038,992 - 1,569,552 x 7%). The increase of the limit for the payment of solidarity tax is advantageous for the entrepreneur.
Each company partner paying VAT for themselves
With the end of 2018, the transition period for VAT application for the company's partners ended. In 2019, all companies must abide by the rules introduced in the amendment to Act No. 170/2017 Coll. from mid-2017. According to the new legal regulations, each partner of the company proceeds and pays the VAT taxes individually for himself.
The blind one again affected by EET
A regulation that exempts the visually impaired from the Electronic evidence of sales (EET) will be canceled due to the Constitutional Court's decision as of 31 December 2018. This change in EET should involve dozens of blind entrepreneurs, however, the financial administration has assured that the inspectors will take blind disability into account when checking. The Ministry of Finance proposes that the visually impaired self-employed should be excluded from EET once again, nevertheless, this has not been approved yet.
Higher income requirement for tax bonuses
If the sumb of tax benefits is higher than the calculated income tax, the tax bonus is eligible. In this case, nothing is paid on income tax, and bonus money is received from the state. However, in order to benefit from the annual tax bonus, it is necessary to have income at least 6 times higher than the minimum wage. In 2018, at least CZK 73 200 (6 x 12 200), however, for 2019 the requirements for receiving the annual tax bonus are tightened as the limit increased to CZK 80 100 (6 x 13 350).
Tax package during 2019
Accountable flat expenses for self-employed businessmen might increase
The tax package from the Ministry of Finance might increase the limits on the use of flat expenses for self-employed businessmen from the current CZK 1 million to CZK 2 million. The rate of value added tax on heat and cold supplies should be reduced from the current 15 to 10 percent.
The tax package also introduces the excise taxation on heated tobacco products. The excise tax should be on the same level as smoking tobacco products.
Moreover, VAT should be reduced from 15 to 10 % for fares on trains, buses or harbors and funiculars. With these changes, the government wishes to bring more money to for development of public transport and make public transportation more affordable, however, it was often said that the ticket prices should not be reduced due to lower VAT rates.
The tax package will be most likely applied during 2019.