Additional Changes in Agreements to Perform a Job from 2025
In our October News, we briefly informed you about additional proposed changes in agreements to perform a job (the “APJ”). This article brings a summary of up-to-date information in the taxation mode and insurance levies, which are to be modified for as many as the third time from 1 January 2025.
The Chamber of Deputies proposed to completely abandon the originally planned concept of so-called notified agreements. Even though this concept had been approved, everything is likely to change again in 2025 because it was found on the basis of interim statistic data of the Czech Social Security Administration Authority for July and August 2024 that the new legal regulation would not significantly influence the existing volume of wage payments.
Changes Planned from 1 January 2025
An amending proposal cancels the original agreement notification mode and partly restores the principals effective until the end of 2024. As a result, multiple agreements to perform a job will not be added up where an employee has entered into more than one such agreement with various employers. There will still be the option to use key amounts for the obligation to participate in the insurance premium system separately for each agreement. The aggregate level will be material in the case of multiple agreements with a single employer.
However, the level of the key amount (threshold) for participation in the insurance premium system should change from 1 January 2025. According to the explanatory memorandum to the amendment, the currently effective fixed amount of CZK 10,000 fails to reflect the growth in wages and should therefore newly be determined on a variable level. Under the amendment, the threshold should amount to 25% of the average wage, which will then be referred to in determining employees’ mandatory participation in sickness insurance. The average wage for 2025 was determined to amount to CZK 46,557. If, as a result, an employee’s monthly income with a single employer in total fails to reach the amount of CZK 11,500, such income should not be subject to social security and healthcare insurance levies.
The threshold of CZK 11,500 should also apply to taxation of APJs with withholding tax.
The register of agreements to perform a job with the Czech Social Security Administration Authority (pursuant to the Sickness Insurance Act), which was introduced on 1 July 2024, is not affected by those changes and continues to be effective.
Amending proposals were submitted in the Chamber of Deputies as part of an amendment to the Employment Act. The bill has passed the second reading but additional changes cannot be ruled out. We are monitoring the legislative process and will keep you informed.
Stela Bartošová
bartosova@clarksonhyde.cz
