Since 1 January 2019 new legislation impacting the calculation of the tax base of employees, who are subject to the obligatory insurance system in the EU, EEA and Switzerland, is effective.
According to the amended legislation, which was signed by the president on December 11, 2018, the calculation of a tax base (so-called super-gross salary) reflects which insurance system the employee is affiliated to. If it is proven that the employee is subject to foreign obligatory insurance of another EU member state or a member of the EEA or Switzerland, the tax base shall be calculated as gross income from employment plus an amount corresponding to the premiums which the employer pays as this obligatory foreign insurance.
With respect to the calculation of the super-gross salary of employees subject to the Czech insurance system and those of third countries, the tax base remains the same. To assess the tax base for employees subject to the Czech system, the real amount of obligatory insurance contributions paid by the employer shall be added to the gross income; in case of individuals obligatory insured in a third country a hypothetical amount of insurance otherwise due based on the Czech legislation should be added.
The adopted amendment has serious impacts on practice, especially concerning payroll system set-ups. Without the information or confirmation of the real insurance premiums paid by the employers in the EU/EEA it will not be possible to correctly asses the tax on income from employment.