Updated on: 2025/08/04 14:03 (UTC)
Overview
The Czech Republic is located in the center of Europe and was part of the country of Czechoslovakia until 1993, when the Czech Republic and Slovakia were formed. The Czech Republic consists of 13 regions, or kraje, and the capital city of Prague. The regions are Jihocesky (South Bohemia), Jihomoravsky (South Moravia), Karlovarsky (Karlovy Vary), Kralovehradecky (Hradec Kralove), Liberecky (Liberec), Moravskoslezsky (Moravia-Silesia), Olomoucky (Olomouc), Pardubicky (Pardubice), Plzensky (Pilsen), Stredocesky (Central Bohemia), Ustecky (Usti), Vysocina (Highlands), and Zlinsky. (Zlin). The Czech Republic also is known as Czechia.
The Czech Republic’s currency is the Czech koruna.
Employers in the Czech Republic are responsible for withholding income taxes from employees, withholding Social Security taxes from employees and making Social Security contributions. In addition, employers must comply with compensation and benefit regulations outlined in the Labor Code and contribute to employee selected private health insurance funds.
Foreign workers in the Czech Republic are generally subject to the same regulations as Czech citizens but employers must ensure they have the proper visas and work permits. The Czech Republic is a member of the European Union (EU) and subject to EU agreements on foreign workers.
Czech residents working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.
CURRENCY DETAILS
The currency of the Czech Republic is the Czech koruna (CZK), also known as the Czech crown. The internationally recognized three-letter currency code for the Czech koruna is CZK, which also is one of the currency’s commonly used currency symbols. The standard plural form of Czech koruna is Czech koruny, although the plural forms of Czech korun or Czech korunas are used for some contexts.
When an amount of Czech koruny is written using the currency symbol CZK, as is commonly done in English, the symbol precedes the numerical value with a space between the numerical value and symbol.
When an amount of Czech koruny is written using the Czech-language currency symbol or its variant s, the symbol follows the numerical value with a space between the numerical value and symbol.
There is a set of currency symbols applicable to crown currencies, which are currencies whose name contains a word that translates to crown, including the words koruna, krona, króna, and krone. When an amount of Czech koruny is written using the currency symbol Ckr. or one of its variants (Ckr, CKr., CKr, CKR., and CKR) to distinguish Czech koruny from other crown currencies, and when Czech documents use the general crown currency symbol kr. or one of its variants (kr, Kr., Kr, KR., and KR) to refer to Czech koruny, the currency symbol precedes the numerical value with a space between the numerical value and symbol.
One hundredth ( 1 ⁄ 100 ) of a Czech koruna is referred to as a haler, with the plural form of halere or haleru depending on context, although transactions involving Czech currency do not typically include amounts other than whole numbers of Czech koruny.
When amounts of Czech koruny are written in Czech, the comma that in English separates the thousands place from the hundreds place instead is rendered as a space.
TAXES
The national government generally enacts laws relating to income tax. All employers are required to withhold and remit income taxes and Social Security taxes. In addition to withholding employee Social Security contributions, employers must also make Social Security tax payments on payroll.
Income taxes are regulated by the Czech Financial Administration (Financní správa), while Social Security is regulated by the Czech Social Security Administration.
The Czech tax year is the calendar year.
Coronavirus (Covid-19) Guidance: Employers that did not pay employer social taxes due for May to July 2020 in full and on time could make the full deposits by Oct. 20, 2020, with applicable penalties reduced by 80% and rounded to the nearest Czech koruna. If the resulting penalties are up to CZK 1,000, they are waived. To benefit, the employer must deposit employees’ social taxes in full and on time.
Under the country’s Antivirus Employment Protection Program, employer social taxes could be reduced for June to August 2020 for employers with up to 50 employees, defined as the number registered for sickness insurance on the last day of a given month, if the number of these employees was at least 90% of the number that the employer had on March 31, 2020, and the taxable wages paid to them were at least 90% of the amount reported for March 2020. When determining taxable wages, the employer first subtracted up to CZK 52,253 from each employee’s taxable wages for a given month before applying the employer social tax rate of 24.8%. Employers could only claim reductions in the months in which they met all the requirements, could not claim reductions if they are receiving wage subsidies through the Antivirus Employment Protection Program, and must pay all employee social taxes.
Late-filing penalties were waived for the income tax withholding year-end report if it was filed by May 31, 2020.
According to European Commission guidance, employees who normally work in one European Union member country and live in another are still considered to be insured by the social insurance system of the normal work country while working at home.
Income Taxes
Income taxes are regulated by the Czech Financial Administration.
Coverage: All resident employers are required to withhold income taxes from employees.
Employees: Employees are defined as those performing work, which is compensated with wages, salary, or another form of remuneration, in subordinate roles to their employers.
Tax residents of the Czech Republic are those who have their home address in the Czech Republic or who reside in the Czech Republic at least 183 days in a tax year.
Rates and Thresholds: Effective starting Jan. 1, 2021, an income tax rate of 15% is assessed on income of up to 48 times the applicable average wage in the Czech Republic, and an income tax rate of 23% is assessed on income of more than that threshold.
Effective for 2021, based on an applicable average wage of CZK 35,441, the income tax threshold is CZK 1,701,168.
Effective until Dec. 31, 2020, income tax was generally assessed at a standard flat rate of 15%, and a solidarity tax of 7% was assessed on income that exceeded the social security maximum calculation base in effect for the year, which was 48 times the applicable average wage in the Czech Republic. Effective for 2020, based on an applicable average wage of CZK 34,835, the income threshold above which the solidarity tax was assessed was CZK 1,672,080.
Registration: In order to conduct business, a company must obtain a business license prior to its foundationeither a trade authorization or another type of business license to obtain a license. To obtain a license, applicants must submit a request to the Trade Licensing Office. All companies must register with the local tax administration body within 30 days of obtaining their business license.
Additionally, all companies must register with the Commercial Register (Obchodní Rejstrík), which is maintained by the Registry Court. All companies must register with the Commercial Register within 90 days of commencing commercial activities or having applied for a trade license.
Taxable Amounts: Taxable income includes all income from employment, and effective starting Jan. 1, 2021, no longer includes social security and health insurance contributions paid by the employer, which when combined with income from employment were known as super-gross wages (superhrubá mzda). Income from employment is defined as:
- income from current or former employment, service, or member relationships and similar relationships in which the taxpayer while working for the payer of income is required to comply with the orders of the payer;
- receipts for the work team members, partners and managers of limited liability companies;
- remuneration of members of statutory bodies and other bodies of legal persons; and
- income received in connection with the current, future, or former employment.
Withholding Methods: Employers must withhold income taxes from all paychecks and remit them monthly.
Returns and Remittance: Employers must make monthly remissions of withheld income tax to the Czech Financial Administration. Employers must remit withheld income taxes to the local tax administrator by the last day of the calendar month when the withholding was required to have occurred.
Employers must also produce a year-end report, which includes a summary of tax withheld. The year-end report must include Form MFin 5459 Model Number 22, Income Tax Statement of Dependent Activity (Vyúctování dane z príjmů ze závislé cinnosti), along with Form MFin 5490/1 Model Number 19, Attachment Number 1: “Number of Employees” (Príloha c. 1 „Pocet zamestnanců“) and Form MFin 5530 Model Number 14, Attachment Number 2: “Overview of aggregated data recorded on payroll sheets of taxpayers listed in Section 2 (3) of the Income Tax Act” (Prílohu c. 2 „Prehled souhrnných údajů zaznamenaných na mzdových listech poplatníků uvedených v § 2 odst. 3 zákona o daních z príjmů“). The year-end report detailing payroll data for a year must be submitted to the government by March 1 of the following year, or March 20 if the employer submits the report electronically.
Tax forms can be electronically filed through the Czech Financial Administration’s Tax Portal (Danový Portál).
Payments can be made by cash, check, or bank transfer and may be submitted along with returns at authorized banks, Czech Financial Administration offices, or online using the Czech Financial Administration’s e-submission (ESU) application.
Employee Share Plans: According to the law firms White & Case LLP and DLA Piper, employees are taxed on the spread on purchase of the stock. The gain from the sale of stock is subject to tax if the stock has not been held for more than six months.
Under current interpretations, if the plan does not involve shares of the employer and the costs of the plan are not recharged to or borne by the employer, awards generally will not be subject to social security and health insurance tax implications for the employees or the employer.
Recordkeeping: Tax records must generally be kept for a minimum of three years.
Penalties: For late tax returns and payments fines can be assessed at 0.1% of the tax liability for each day in default. If payment is ordered as the result of an inspection, fee rates double. In the case that taxes are more than 500 days overdue, fines increase to 140% of the Czech National Bank discount rate per annum.
Fines for not completing nonmonetary tax duties can amount to up to CZK 2 million.
Social Taxes
Employers in the Czech Republic are responsible for Social Security withholding and payments and also are responsible for paying premiums for workers’ compensation, also known as compensation for accidents at work and occupational diseases (odskodnování pracovních úrazů a nemocí z povolání). Social Security is administered by the Czech Social Security Administration (Ceská správa sociálního zabezpecení, abbreviated in Czech as CSSZ and in English as CSSA) and includes a pension insurance fund, the state unemployment policy fund, and sickness insurance fund.
Workers’ Compensation, while separate from Social Security, also is administered by the Czech Social Security Administration.
Employees are eligible for voluntary pension insurance, a program in which a portion of participants’ contributions to the District Social Security Administration (DSSA) are allocated to a private insurance company by DSSA. Participants have higher contributions, but their employers have the same reporting obligations.
Coverage: The obligation to cover employees with pension, sickness, and unemployment insurances begins the first day of employment and ends the last day of employment. All employers generally are required to withhold social security taxes from employees’ wages, remit the withheld social security taxes to the government, and also pay to the government employer portions of social security taxes.
Employees who are exempt from Social Security tax withholding include:
- nonresidents working for employers with diplomatic privileges and immunities;
- foreign workers who are residents of countries with totalization agreements with the Czech Republic; and
- employees carrying out only occasional work, which is defined as employment lasting less than eight days, or work with assessable income of no more than CZK 400 in a particular month.
Rates and Thresholds: The maximum annual amount of employment income paid to an employee upon which the social security tax rates for the employee and the employer may be assessed is known as the maximum calculation base or the maximum computable annual wage (dílcím základem dane). The maximum calculation base in effect for a year is 48 times the applicable average wage in the Czech Republic.
Effective for 2021, based on an applicable average wage of CZK 35,441, the maximum calculation base is CZK 1,701,168. Effective for 2020, based on an applicable average wage of CZK 34,835, the maximum calculation base was CZK 1,672,080.
Employers and employees are assessed taxes to fund pension insurance. Employers, but not employees, also are assessed taxes to fund sickness insurance and unemployment insurance.
Effective since July 1, 2019, the total employer social security tax rate is 24.8% and consists of the following components:
- Pension Insurance: 21.5%
- Sickness Insurance: 2.1%
- Unemployment Insurance: 1.2%
Effective until June 30, 2019, the aforementioned component rates were in effect, except the sickness insurance tax rate was 2.3%.
Employees are assessed a pension insurance tax rate of 6.5%.
The Czech Republic’s health insurance tax rates for employers and employees are covered in the Other Taxes section of this primer.
Workers’ compensation rates assessed on employers vary among industries and assessed risk levels.
Employers and employees in the Czech Republic also are assessed contribution rates to fund health insurance benefits. More information regarding these assessments is in the Other Taxes section of this primer.
Taxable Amounts: Contributions are calculated based on income from employment, compensation for employees’ costs incurred to carry out work, damages paid by employers, and all bonuses.
Registration: Employers must register in the employer registry and provide notifications on the hire or termination of employees. Employers must register in the employer registry by filing the “Registering an employer in the employer register” form with DSSA, within eight days after commencing commercial activities. Additionally, employers must notify the DSSA of the commencement or termination of an employee within eight days of either action.
Returns and Remittance: All employers must make monthly payments of Social Security and workers’ compensation contributions to the Czech Social Security Administration. Employers can make payments starting the first day of the month, and must make them by the 20th day of each month. All employers must file the “Overview of the amount of premium” form (Number 89 542 13) along with their monthly payments.
Employers must inform DSSA of all work related injuries or deaths, employees taking maternity leave, and employees taking sick leave.
Payments must be made in Czech koruny, through payments in cash, bank transfers, check, or online. Forms must be filed in person at the DSSA, by mail, or electronically through the CSSA ePortal (CSSZ ePortál).
Recordkeeping: Tax records must generally be kept for a minimum of three years.
Penalties: Late payments are assessed fees interest penalties of 0.05% of tax outstanding per day.
Other Taxes
The Czech Republic mandates that all employers enroll their employees in private health care insurance. Employers must make monthly contributions and remittances to the health insurance company of employees’ choosing and comply with Ministry of Health (Ministerstvo Zdravotnictví) regulations.
Coverage: All employers generally are required to perform payroll withholding of health insurance contributions from employees’ wages and remit the payments. All employees are subject to this withholding. The coverage mandate begins on the first day of employment and ends upon termination of the employment relationship.
Rates and Thresholds: The total health insurance contribution rate is equivalent to 13.5% of employee salary and consists of a rate of 9% assessed on employers and 4.5% assessed on employees. Employers with high risk of work-related accidents may be assessed additional health insurance contributions.
There is no maximum amount of assessable wages in effect for health insurance contributions.
Taxable Amounts: Health insurance contributions are assessed on all wages and fringe benefits. Some excluded benefits include severance payments and certain disability pensions.
Registration: Employees are responsible for enrolling themselves in the health insurance company of their choice within eight days of their hire date. Employees may switch health insurance companies once a year, although they must apply to do so by June 1st. Changes become effective Jan. 1 of the following year. Employees must inform their employers of enrollment in a new health insurance company within eight days of enrollment. Employees much acknowledge the receipt of this notification in writing. Employees who fail to issue proper notifications or correctly register are responsible for the penalties employers may incur during this period.
Employers must register with the health insurance companies that their employees chose within eight days of being notified of employees’ health insurance company selections. If employers’ obligations change due to changes in employment, employers must notify health insurance companies within eight days.
Some insurance companies may require additional registration forms and procedures.
Returns and Remittance: Monthly payments must be made by the 20th of the month following the month when health insurance contributions were withheld. Payments must be rounded up to the nearest koruna.
Employers must send reports on occupational accidents for the previous month by the fifth day of the following month.
Additional reporting requirements vary among health care companies.
Recordkeeping: The statute of limitations for health insurance is five years, but may be extended to 10 years in some situations.
Penalties: Failure to register employees with health insurance companies or notify health insurance companies of changes in premiums can result in fines of up to CZK 200,000, payable to the health insurance company.
Late payments are assessed a 0.05% fine on the premiums due per day, payable to the health insurance company.
Repeat offenses may result in the doubling of fines.
The Ministry of Health may assess additional penalties.
State/Jurisdiction Taxes
Taxes on employment income are not assessed by any of the Czech Republic’s regions or local jurisdictions.
COMPENSATION AND BENEFITS
Compensation and benefits requirements generally fall under the Labor Code and the Employment Act. The Ministry of Labor and Social Affairs is charged with enforcing the Labor Code and the Employment Act and it’s considered the Czech authority on social and labor relations, safety at the workplace, employment and retraining, collective bargaining, wages, pensions, health insurance, and other labor issues. Czech law also requires employers to make payments and withhold on employee salary to make contributions to employee-selected private health insurance. This health insurance mandate is overseen by the Ministry of Health.
All employers are required to contribute to the Czech Social Security pension fund. Coverage is located under social taxes.
The Labor Code is the main source of labor law in the Czech Republic. The Labor Code regulates termination pay, working hours, wage regulations and other labor regulations. Other important labor laws legislation includes the Collective Bargaining Act, The Employment Act, The Labor Inspection Act and the Act Stipulating Further Requirements for Health and Safety at Work.
Coronavirus (Covid-19) Guidance: Employers may apply to the Ministry of Labor and Social Affairs for two wage subsidies provided by the Antivirus Employment Protection Program (Program ochrany zamestnanosti Antivirus) through an online portal (Czech) to partially replace wages for employees who cannot work. The first program, Program A, covers employees who cannot work because they must quarantine, or because government restrictions require the employer to close or reduce business, and provides 100% of an employee’s wages if a business closes or 80% of an employee’s wages if they must quarantine, up to a maximum of CZK 39,000 per month. The second program, Program B, covers employees who cannot be assigned work because many of the employer’s employees are absent; or because the employer must reduce business for economic reasons, and provides 60% of an employee’s wages, up to a maximum of CZK 29,000 per month. Both programs are to operate until Dec. 31, 2020.
Minimum Wage
The Czech Republic has a standard minimum wage and seven higher minimum wage levels for workers whose jobs involve a scope of complexity and level of professional sophistication beyond the jobs for which the standard minimum wage applies. The standard minimum wage is considered to be the minimum wage for Work Group 1, and the difficulty of work rises with each Work Group level from 2 to 8. Each Work Group contains two grades of work, with Work Group 1 containing Grades 1 and 2, Work Group 2 containing Grades 3 and 4, and so forth through Work Group 8, which contains Grades 15 and 16.
Effective for 2022, the standard minimum wage, which is the minimum wage for Work Group 1, is CZK 96.40 per hour or CZK 16,200 per month for a normal workweek of 40 hours.
Effective for 2021, the standard minimum wage, which is the minimum wage for Work Group 1, was CZK 90.50 per hour or CZK 15,200 per month for a normal workweek of 40 hours.
The annex to Government Regulation No. 567/2006 details the differences among the eight work groups regarding scope of complexity and level of professional sophistication, and also provides examples of types of jobs that are within the groups.
Generally, the work groups are differentiated as follows:
- Work Group 1: Simple and repetitive work assigned by others that may involve handling simple tools. For jobs that involve particularly physical activity, Work Group 1 covers those requiring light use of muscles in repetitive rhythm, often with one-sided loads for small muscle groups.
- Work Group 2: Work that while simple and repetitive involves additional limited discretion in how the work is performed than for Work Group 1, with slightly increased sophistication necessary for performing the work in comparison to Work Group 1. For jobs that involve particularly physical activity, Work Group 2 covers those requiring long-term and one-sided loads for large muscle groups.
- Work Group 3: Work that is complex in comparison to the work performed by Work Group 2, with employees required to regularly and independently engage in problem-solving, often in a way that involves imagination, analytical foresight, or comparison of data. For jobs that involve particularly physical activity, Work Group 3 covers those requiring high loads for large muscle groups in very difficult working conditions.
- Work Group 4: Work that is more specialized compared with work performed by Work Group 3, with employees required to regularly and independently engage in problem-solving at a higher level than for Work Group 3, with concrete, diverse, and abstract phenomena and processes considered. Work for this work group also requires adaptability to varying conditions, logical thinking, and meticulousness. For jobs that involve particularly physical activity, Work Group 4 covers those requiring excessive loads for large muscle groups in extreme working conditions.
- Work Group 5: Work that involves systems of processes that are distinctly more complex than those handled by Work Group 4, with increased demands on cognition, understanding and interpretation of advanced phenomena and processes, skilled memorization, syntheses of data, and exceptional stress on the nervous system.
- Work Group 6: Work that in comparison to Work Group 5 involves considerable psychological effort because of the significant complexity of the work processes, which involve a higher degree, in comparison to Work Group 5, of abstract thinking, imagination, and independent decision-making.
- Work Group 7: Work in which employees personally coordinate team efforts to a greater extent than in Work Group 6, with greater levels of complexity, meticulousness, or creativeness required than for Work Group 6.
- Work Group 8: Work in which employees perform the most demanding level of work for which minimum wage compensation nonetheless would be appropriate, in which the degree to which the work is difficult and involves complexity, meticulousness, creativeness, or psychological effort exceeds work for Work Group 7. Employees in Work Group 8 perform work in a set of interrelated fields or the most demanding fields of fundamental importance to the Czech Republic.
Effective for 2022, for a normal workweek of 40 hours, the minimum wage for Work Group 2 is CZK 106.50 per hour or CZK 17,900 per month; Work Group 3, CZK 117.50 per hour or CZK 19,700 per month; Work Group 4, CZK 129.80 per hour or CZK 21,800 per month; Work Group 5, CZK 143.30 per hour or CZK 24,100 per month; Work Group 6, CZK 158.20 per hour or CZK 26,600 per month; Work Group 7, CZK 174.70 per hour or CZK 29,400 per month; and Work Group 8, CZK 192.80 per hour or CZK 32,400 per month.
Effective for 2021, for a normal workweek of 40 hours, the minimum wage for Work Group 2 was CZK 99.90 per hour or CZK 16,800 per month; Work Group 3, CZK 110.30 per hour or CZK 18,500 per month; Work Group 4, CZK 121.80 per hour or CZK 20,500 per month; Work Group 5, CZK 134.40 per hour or CZK 22,600 per month; Work Group 6, CZK 148.40 per hour or CZK 24,900 per month; Work Group 7, CZK 163.90 per hour or CZK 27,500 per month; and Work Group 8, CZK 181 per hour or CZK 30,400 per month.
There are numerous work conditions that are considered to be work conditions of an arduous work environment, and an employee whose job involves such a work condition must be paid at least the standard minimum wage plus 10% of that amount for each arduous work condition that the employee’s job involves. There are 12 arduous work environment conditions, each of which is specified in Section 6 of Government Regulation No. 567/2006. If an employee whose job involves working in such a work condition is in a work group numbered higher than 1, the employee, instead of needing to be paid at least the standard minimum wage plus each arduous work condition premium of 10% for which the employee is eligible, would need to be paid the minimum wage for that work group if it is higher.
Overtime
Generally, overtime must be paid for work in excess of 40 hours per week. Overtime work must be compensated at a premium of 25%, unless there is an agreement in place providing compensatory leave as compensation. Compensatory leave offered in such circumstances must be provided within three months of the performance of overtime work. Employers may not require more than an average of eight overtime hours in a 26 week period, and 150 hours of overtime in a calendar year. Employees under the age of 18 may not work overtime.
Work performed on mandatory paid public holidays must be compensated with compensatory time off within three months of the holiday in addition to normal wages. Night work and work on weekends must be compensated at 10% above normal wages.
Hours of Work
Generally, the maximum workweek is 40 hours and the maximum workday is 12 hours. Employees who work underground in the extraction of coal, ores, or non-metallic raw materials, who work in the construction of mines, or who work in geological prospecting of mining sites are limited to a 37.5 hour workweek.
Generally, employees must be given a 30 minute unpaid break, such that employees do not work more than 6 consecutive hours. All employees must be given a 12 hour rest period between shifts. In some cases, this period may be reduced to eight hours, provided the following rest period is increased by the same amount.
Night work is defined as work between the hours of 10 p.m. and 6 a.m. and may not exceed eight hours within a period of 24 hours.
Holidays
Mandatory paid holidays in the Czech Republic are as follows:
- Jan. 1: New Year’s Day
- Easter Monday
- May 1: Labor Day
- May 8: Liberation Day
- July 5: Day of the Slavic Apostles Cyril and Methodius
- July 6: Jan Hus Day
- Sept. 28: Day of Czech Statehood
- Oct. 28: Czechoslovak Independence Day
- Nov. 17: Struggle for Freedom and Democracy Day
- Dec. 24: Christmas Eve
- Dec. 25: Christmas Day
- Dec. 26: St. Stephen’s Day
Leave
Full-time employees must be given four weeks of paid annual leave each year. The leave accrues progressively and employees must be paid their average rate of pay when taking annual leave. Pedagogical and academic employees must be given eight weeks of annual leave per year. Leave that is not taken in a given year must be compensated with an employee’s average wage.
Supplemental leave: Employees who work extracting minerals underground, building underground tunnels, in particular difficult work must be compensated with one week of supplemental leave. Hard work is defined by the Labor Code as certain medical fields of work, work involving exposure to radiation, work involving contact with infectious materials, work in tropical areas, work involving regular contact with prisoners, and work involving scuba diving. Supplementary leave cannot be exchanged for compensation.
Sick leave: Effective July 1, 2019, employers must pay employees for 14 days of sick leave. Until July 1, 2019, the first three days of sick leave were unpaid, after which employers were to remunerate employees for up to 14 days of sick leave. Employees may receive additional sick leave paid from social security after using the original 14 days. These additional days of leave are paid at 60% of wages over the previous year.
Paid parental leave: Paid parental leave is paid for by the Czech Republic’s Social Security Administration.
Female employees are entitled to 28 weeks of maternity leave, or 37 weeks in the case of multiple births. Maternity leave may be taken starting six weeks prior to the babies’ due date. Mothers of stillborn children are entitled to 14 weeks of maternity leave. Mothers of adopted children are entitled to 22 weeks of maternity leave, which is extended to 33 weeks in the case of multiple adoptions.
Male employees are entitled to seven days of paternity leave within the first six weeks of the birth or adoption of a child.
Civic duty leave: Employees generally must provide all employees with unpaid leave to fulfill civic duties.
Service leave: Employees are entitled to paid leave in the case of military service, paid for by the military authority.
Wage Payment
Employers are required to pay wages in monthly, or shorter, installments. Employers must provide all employers with a written wage statement indicating the applicable pay rate, pay grade, pay day, on employees’ hire date or whenever their pay rate changes. Employers must also provide employees with itemized pay slips on a monthly basis, which detail wages and deductions. Wages must be made in legal tender and must be rounded up. In the absence of an agreement, wages must be paid at the workplace during work hours.
Bonuses and Special Benefits
The Czech Republic does not require employers to provide monetary bonus payments to employees.
Termination Pay
Employers and employees who terminate employment relationships generally must give one calendar month of notice, beginning on the first day of the month following the delivery of the notice. Employers are not required to give notice in the case of a gross breach of contract, or if employees are convicted of criminal charges. Employees do not need to give notice in the case of certain health restrictions, or if employers have outstanding wage payments more than 15 days overdue.
Employers generally must pay all terminated employees severance pay of:
- one month’s average earnings for an employment relationship of less than a year;
- two months’ average earnings for an employment relationship between one and two years; or
- three months’ average earnings for an employment relationship of more than two years.
Severance must be paid on the would-be-next pay day of the terminated employee after the termination of the employment relationship, unless both parties agree to a different date.
Workers’ Compensation
Workers’ compensation and retirement plans are covered under social taxes .
Recordkeeping
Employers must keep records of employees, which should include employees’ names, position, hours worked, wage payments and deductions and other supporting documents, for at least 10 years. Employers should also keep a log of work related accidents and deaths as prescribed by the Social Security Administration and must maintain all documents relating to prior workers’ compensation claims for 30 years after the relevant incident.
Employers should notify the Labor Authority of the hire of a new employee within five days of their hire.
FOREIGN WORKERS
Foreign workers are entitled to the same rights as Czech citizens and are generally covered by the same tax and workplace laws. Employment is covered by the Law on Employment.
Visas: The Czech Republic issues Employee Cards that allow employees intending to work in the country for more than three months to reside in the country for up to two years, with the option to apply to extend the applicability of the residence period. An Employee Card also allows its recipient to work in the aspect of employment for which the card was issued. An Employee Card can be applied for at the Ministry of the Interior in the Czech Republic or at a Czech embassy in the foreign national’s country of origin.
Employees may also obtain Blue Cards, which are combination work permits and residence permits. Blue cards are designated for highly skilled foreign workers, who are working in positions requiring high qualification for a period of at least one year at wages at least 1.5 times the average gross wage in the Czech Republic.
Employers do not need to apply for employment permits for foreign workers with permanent residency permits or citizens of other EU countries, nor do these employees need to apply for additional work or residency permits.
Taxes: Foreign workers in the Czech Republic have the same tax obligations as Czech citizens. Nonresidents are taxed on their Czech-based income. Nonresidents are defined as those that do not have permanent residences in the Czech Republic or those who have not resided in the Czech Republic for at least 183 days in a calendar year.
Wages/Payments: Foreign workers must be paid wages equivalent to the wages of Czech workers with same qualifications. The Czech Republic does not have restrictions on paying wages in different currencies.
WORKING IN THE UNITED STATES
Foreign workers from the Czech Republic must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate
The Czech Republic is eligible for the visa waiver program for business visitors, which allows Czech citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for reasonable length of time is at the discretion of the Department of Homeland Security.
U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.
For tax purposes, Czech citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. The Czech Republic has both a tax treaty and a social tax totalization agreement with the U.S.
State and local taxation of Czech workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.
The U.S. labor laws apply to all workers employed and providing services in the country.
Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.
Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the
Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.
Income Taxes: Generally, nonresidents in the U.S. who are from the Czech Republic and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.
A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from the Czech Republic and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.
Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the
Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.
An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the
Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%. Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.
Tax treaties: The Czech Republic and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. To claim the treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.
Students, trainees and teachers in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student or trainee is temporarily in the U.S. for purposes of teaching or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of studying or engaging in research for a period of two years for teachers and five years for students by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. The student exemption is not to exceed $8,000 a year; no limit is placed on the teacher compensation for Czech residents.
Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.
Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.
Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.
Totalization Agreements: Social Security totalization agreements can allow foreign workers and U.S. nationals working abroad to avoid paying into two social security systems while being subjected to losing benefits for their home country system. Under totalization agreements, generally, foreign workers will only pay into one of the social security systems- either the home or the foreign system- but not both. Foreign nationals, using a totalization agreement, also can count years of contributions paid to different social security systems to all of the systems they have contributed to in order to be eligible for benefits in one country.
The Czech Republic and the U.S. have entered into a totalization agreement and a summary of those provisions is included in
Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.
There are no particular requirements that employees be paid in U.S. dollars.
TREATY ARRANGEMENTS
The Czech Republic has entered into more than 85 income tax treaties, including an income tax treaty with the United States. The Czech Republic also has more than 10 totalization agreements in effect for social tax coverage purposes. including an agreement with the United States.
The Czech Republic’s tax treaties are available in
RESOURCES
All resources in English unless otherwise noted.
General
Czech Republic Government Portal
Hello Czech Republic
U.S. State Department: U.S. Relations With the Czech Republic
CIA World Factbook: Czech Republic
Currency Details
Unicode Consortium: Currency Symbols
International Organization for Standardization: Currency Codes - ISO 4217
United Nations: United Nations Terminology Database: Czech Republic
Taxes
Czech Social Security Administration
Czech Tax Administration (Czech)
Income Tax Law (Czech)
Zákon kterým se mní nkteré zákony v oblasti daní a nekteré dalsí zákony [Law Amending Some Tax Laws and Some Other Laws] No. 609/2020 (Czech)
Ministry of Finance (Czech)
Ministry of Health (Czech)
Employee Stock Purchase Rights: DLA Piper
Compensation and Benefits
Health Insurance Laws (Czech)
Labor Code (Czech)
Ministry of Labor and Social Affairs (Czech)
Government Regulation No. 567/2006
Ministry of the Interior
Foreign Workers
Ministry of Foreign Affairs
Working in the United States
U.S. Department of Labor:
- Foreign Labor Certification
- Hiring Foreign Workers
U.S. Internal Revenue Service:
- IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
- IRS Publication 15, Circular E, Employer’s Tax Guide
- IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- IRS Publication 519, U.S. Tax Guide for Aliens
- IRS Publication 901, U.S. Tax Treaties
U.S. Department of State, Visa Waiver Program
Treaty Arrangements
Czech Tax Administration, List of Double Taxation Agreements