What’s changing in 2024?

The New Year always brings with it changes in legislation as new laws and rules come into effect from January 1. What changes might affect you in 2024? We have compiled an overview of the most significant legislative amendments affecting your finances.

The government’s austerity package, which aims to cut the stage budget deficit by CZK 97.7 billion in 2024, contains a slew of changes which came into effect on January 1. These include taxation changes and rules surrounding savings and pensions.

Taxes and levies

• The highest income tax bracket of 23 percent has expanded from people with incomes above four times the monthly average (roughly CZK 161,000) to include people with an income above three times the monthly average (roughly CZK 132,000).
• Corporate income tax has increased from 19 to 21 percent.
• Minimum social insurance contributions for the self-employed have increased by CZK 908 to CZK 3,852 per month.
• The self-employed now pay social insurance on 55 percent of the difference between their income and expenditure, up from 50 percent.
• VAT (value-added tax) rates have changed from the previous three rates to only two, namely 12 and 21 percent.
• The reduced 12 percent band includes food (but not most beverages), construction work, child car seats and tap water.
• The basic VAT rate now applies to hairdressing and cleaning services, draft beer, firewood, authors and artists’ services, collection and transport of municipal waste, shoe repairs, leather products and bicycles.
• Consumption tax on alcohol and nicotine products has increased.
• The property tax rate has also increased. The precise rate depends on the size of the city or municipality where the property is located, but on average, the tax is 1.8 times higher than it was last year.

Minimum wage

• The minimum wage has increased by CZK 1,600 to CZK 18,900 per month.
• The so-called “guaranteed wage”, which is the minimum possible salary according to profession, has also increased for certain occupational groups:

o   the guaranteed wage for the lowest category, which includes unskilled workers such as cleaners or delivery people, is the aforementioned minimum wage,

o  the guaranteed wage for the second group, which includes garbage collectors and janitors, has increased by CZK 1,600 to CZK 19,500 per month,

o  the third group, which includes plumbers and restaurant servers, get an increase of CZK 1,600 to receive a guaranteed minimum wage of at least CZK 21,300,

o  the eighth and highest occupational category, which includes highly skilled professionals such as stockbrokers and top scientists, get an increase of CZK 3,200 to receive a guaranteed minimum wage of CZK 37,800 per month.

Savings

• The state contribution for building savings has decreased from CZK 2000 to CZK 1000 per year, and is no longer tax-exempt.
• Two new state-supported financial products for retirement have been introduced: the “Long-term investment product” (DIP) and long-term care insurance. DIP offers a higher potential return and tax relief, regardless of how much you deposit each month, but doesn’t offer state contributions. Long-term care insurance aims to ensure private social services for a person in retirement, for example, a guaranteed place in a home for the elderly.
• Tax benefits and state contributions towards pension savings and supplementary pension insurance are changing from July. The minimum monthly deposit required to receive state contributions will increase from CZK 300 to CZK 500, but the maximum state contribution you can receive will also increase from CZK 230 to CZK 340. The minimum monthly deposit required for tax relief is increasing from CZK 1,000 to CZK 1,700.

A number of changes to the Road Traffic Act also started applying from January 1 2024. For an overview of these changes see our companion article “2024: Drivers now face stiff fines for road law violations.”