Payroll and HR in the Czech Republic

Local Information

Local Time (LIVE):5:42 AM
Local Currency:$1 = CZK 22.84
Business Language(s):Czech
Tax Year Dates:1st January – 31st December

 

The landlocked country of the Czech Republic, in central Europe, has a long history of trade. For thousands of years, Prague was on the trade route between northern and southern Europe, thanks to the 430km long river Vltava. Today, Czech’s main exports are vehicles, computer machinery, and other electrical equipment. Prague remains a centre of business, with major companies such as Hewlett Packard and Boeing having offices there.

In order to successfully expand a business to the Czech Republic, compliance with local HR and payroll legislation is imperative. There are considerations to make concerning sick pay, pensions, and maternity pay, as well as income and corporate tax policies.

At FMP Global, we are proficient in the world of international employment law. Utilize our expertise for a seamless and stress free business integration into the Czech Republic, and be confident that your company is 100% compliant with local legislation.

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Details correct at time of publication. You should not rely on these details without first seeking professional international advice.

Employer Must-Dos

Business-owners operating in the Czech Republic are responsible for submitting the following;

  • Corporate Tax Return
  • VAT Control Statement
  • Country-by-Country (CbC) Report (in the case of a multinational group)

Payroll in Czech Republic

What tax considerations are there?

Personal Income Tax

Tax residents in the Czech Republic are taxed on worldwide income, whereas non-residents are only taxed on income from within the Czech Republic. Income tax is set at a standard rate of 15%, regardless of salary. Employees must also make social security contributions which cover pensions, unemployment benefits, and sick pay. The amount payable depends on each individual’s situation.

Tax payments from employees are withheld by employers at the time of pay. Individuals are responsible for filing their own tax return forms annually, however, and the deadline for this is April 1st on the following year.

Corporate Income Tax (CIT)

Any resident companies in Czech must pay CIT on all income, however foreign companies need only pay tax on income derived from within the Czech Republic. Corporate Income Tax is 19%.

Businesses can choose between using the calendar year, or their own accounting year for tax purposes. Either way, tax returns and payment is due within three months of the end of the period. In the Czech Republic, companies must pay tax advances either quarterly or six-monthly – these payments are based on the tax liability of the previous year. After these payments, the amount due at the time of the tax return is whatever is outstanding. In the event of overpayment, there will either be a refund or a tax credit for the following year.

HR in the Czech Republic

What are the regular working hours in the Czech Republic?

In the Czech Republic the normal working week is 40 hours. No more than an additional 8 hours can be worked and these must be treated as overtime. The working week is Monday to Friday, and hours are usually within 8am and 6pm. Employees are entitled to a minimum of 30 minutes rest after 6 hours.

Vacation, maternity and sickness

After having worked for 60 days, employees are entitled to 4 weeks of holiday annually. The dates this can be taken is up to the employer’s discretion, however employees are entitled to at least two consecutive weeks. In addition to this there are 14 days of public holidays during which employees are not expected to work. Those who do work are entitled to extra pay according to Czech law.

Pregnant employees are entitled to maternity leave of up to 28 weeks for one birth, and up to 37 weeks for multiple births. Maternity pay is paid to women who have worked for a minimum of 270 days in the preceding two years. This is paid between 6 week prior to the birth and 6 months after the birth, and is 70% of an employee’s normal salary.

Employees in the Czech Republic are allowed up to 14 days of sick leave. Employers must pay employees 60% of their average earnings during this time.

Termination

Both employees and employers must give a minimum of two months notice to terminate the contract. Employers cannot give such notice during ‘protective periods’ such as pregnancy or maternity leave.

Under ordinary circumstances, if an employee is let go they are entitled to severance pay. The amount of this will depend on how long they have been employed; one month’s worth of salary if they have been employed for up to one year, two month’s salary for between one and two years, and three month’s salary for anything over two years of employment.

Understand global payroll administration

Download our comprehensive guide to international payroll to understand legislation such as regarding income tax, pensions, and parental leave.

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FMP’s Czech Payroll and HR Solutions

When thinking about expanding a business to Prague, Brno, Ostrava, or elsewhere in the Czech Republic, it’s important for company owners to have a thorough grasp on the local employment law. This can sometimes be a somewhat daunting undertaking, so avoid unnecessary stress by getting in touch with the experts here at FMP Global. With ample experience in international payroll and HR, we can help in a variety of ways including;

  • Handling confidential payroll
  • Multiple-currency payroll
  • Payslip administration
  • Pay deductions
  • Benefits and pension administration
  • Payroll audits
  • HR consultation
  • Translation services
  • Year End tax reconciliation
  • Assistance implementing HR procedures
  • Communication with social bodies

Contact FMP help expanding to the Czech Republic

You can rely on the FMP Global team to help make sure your company is 100% compliant with Czech HR and payroll law. Abate anxiety and added stress by coming to the experts.

Start your International Expansion Today