The tax package, which represents one of the major tax law amendments for 2021, has reached its destination, and was duly published the Collection of Laws on 31 December 2020. Contrary to some expectations, the changes thus come into effect as of 1 January 2021.

What has changed as of 1 January 2021?

• Abolition of supergross salary. Increase of taxable income with social security and health insurance premiums paid by the employer is now history. The supergross salary and the solidarity tax increase has been replaced by progressive personal income tax rate of 15%, which applies to up to 48 times the average salary, and the rate of 23%, which applies to income exceeding 48 times the average salary (i.e. CZK 141,764 monthly). Compared to prior years, where the solidarity tax increase only targeted income from employment and business, the new 23% rate will target all sorts of income (including income from lease, from sale of shares or other income). The changes have to be processed when calculating salaries for January 2021 and employees will thus enjoy a net salary increase as of February 2021 already (when January 2021 salary is paid out).

• Default tax credit. Default tax credit increases to CZK 2,320 a month i.e. by CZK 250. The law further anticipates an additional increase of CZK 250 as of 1 January 2022, to CZK 2,570.

• Meal voucher lump sum. The possibility to provide a cash contribution to employees instead of meal vouchers has been enacted in its original version, as we informed you here.

• Depreciation of assets. The threshold for registered fixed assets increases from CZK 40 thousand to CZK 80 thousand. Extraordinary depreciation has been implemented for fixed assets classified in depreciation groups 1 and 2, where tax depreciation can be accelerated to 12 or 24 months respectively. This possibility comes into effect for assets acquired as of 1 January 2020. Tax depreciation of intangibles is also abolished. You will find more detailed information here.

• Tax exemption for sale of shares remains in place based on rules valid in 2020. Sale of shares is income tax exempt without any limit under the condition that the period between acquisition and sale exceeds 3 years.

• Notification on tax exempt income paid abroad. There will be administrative relief for notifying income paid abroad. The new monthly limit for obligatory notification on income payments increases from CZK 100 thousand to CZK 300 thousand. The notification will be filed only once a year, by 31 January of the following calendar year.

• Publication of financial statements. The tax package also includes a change of the Act on Accounting, which implements a new possibility of publishing financial statements of companies in the Collection of Deeds. Until now the publication took place by sending a scanned copy of financial statements through the data box to the competent Commercial Court, newly this obligation can be fulfilled via the tax authorities. However, this will not be any major relief for entrepreneurs, because the financial statements meant for publication will have to be filed as an additional enclosure to the tax return in a prescribed format and structure. This will likely be the same type of filing that a company would make to the respective court, the only difference being that the filing will now go through the tax authorities. It will be possibly to use this measure for the first time for financial statements for year 2021.
  

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