Minimum wage increase
The minimum wage will rise to CZK 15,200 in 2021.
As the minimum wage rises, so do wages in the guaranteed categories. Consider whether you should give yourself or your employees a raise. 🙂 Conversely, those of you who run a business while also employed, do not be afraid to ask for the adjustment to which you are legally entitled. You can find the categories and new minimum wage levels here.
Abolition of the super-gross wage
This news can hardly have passed anyone by. It will be replaced by straightforward taxation of gross wages at 15%, or 23% for monthly income above CZK 140,000.
There has also been an increase in the basic taxpayer credit from CZK 24,840 to CZK 27,840 a year.
The table below compares the minimum wage calculation for 2020 and 2021.
| 2020 | 2021 | |
| Gross wage | CZK 14,600 | CZK 15,200 |
| Social insurance (paid by the employer – 24.8%) | CZK 3,621 | CZK 3,770 |
| Health insurance (paid by the employer – 9%) | CZK 1,314 | CZK 1,368 |
| Super-gross wage | CZK 19,535 | abolished |
| Social insurance (paid by the employee – 6.5%) | –CZK 949 | –CZK 988 |
| Health insurance (paid by the employee – 4.5%) | –CZK 657 | –CZK 684 |
| Income tax advance | CZK 2,940 | CZK 2,280 |
| Basic taxpayer credit | CZK 2,070 | CZK 2,320 |
| Tax remitted/tax bonus | –CZK 870 | +CZK 40 |
| Net wage | CZK 12,124 | CZK 13,568 |
I therefore ask all clients directly affected by the minimum wage to stop their standing orders in January 2021. From February 2021, higher amounts must be sent to the tax office, insurers and your own bank account. Ideally, update them immediately using the standing order table below.
| until 31.1.2021 for December 2020 wages | from 1.2.2021 for January 2021 wages | |
| Social insurance | CZK 4,570 | CZK 4,758 |
| Health insurance | CZK 1,971 | CZK 2,052 |
| Advance income tax | CZK 870 | cancel entirely |
| Net wage | CZK 12,124 | CZK 13,568 |
I will inform other clients of their new amounts individually when processing January 2021 payroll. If you cannot wait to find out how much extra will land in your pay packet, I recommend this calculator.
Generally, employees will be better off across the board. First, they will pay less tax because the tax base is lower, and they can also claim a higher taxpayer credit against that tax. In my view, employers benefit too: their employees get a pay rise without the employer having to increase wages. At least something positive to end this never-ending year. 🙂
If you are unsure what to do, please get in touch and we can look at it together. 🙂