People should have more money in their pockets next year. Tax rebates per taxpayer will increase and the abolition of the super-gross wage or the depreciation limit for children will also be reflected. Inflation will have a negative effect.
Increase of the tax rebate per taxpayer, actual cancellation of the maximum limit for the payment of the monthly tax bonus or a new amount of flat tax for self-employed persons. These are the most important tax changes that taxpayers will encounter next year. The increase in the minimum wage will then affect the amount of the minimum advance on health insurance and the maximum amount of the annual discount for placing a child in a preschool facility, the so-called kindergarten. At the same time, next year’s tax returns for this year will reflect a change in the form of the abolition of the super-gross wage at the beginning of this year. This follows from information on the website of the Ministry of Finance and the opinions of experts.
The basic tax rebate per taxpayer increases next year from CZK 27,840 to CZK 30,840. “It will therefore mean a slight increase in net income in the form of a lower tax liability,” said Monika Lodrová, head of the personal income tax department at BDO Czech Republic.
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Your parents will get better
PwC partner and personal tax expert Tomáš Hunal reminded that the increase in tax benefits for dependent children also increased during this year. However, according to him, it will be practically possible to apply this only in the tax return, or in the annual tax settlement. The annual amount of the tax benefit for the second child increased by CZK 2,916 to 22,320 and for each additional child by CZK 3,636 to CZK 27,840 per year. The discount for the first child remained at CZK 15,204. “Monthly increased amounts will not be applied until the calculation of tax advances for January 2022,” he pointed out.
From next year, in connection with the tax benefit for children, the monthly limit for applying the tax bonus will actually end. “Until 2020, the annual amount of the tax bonus was capped at 60,300 crowns, the taxpayer could therefore claim a maximum of 5025 crowns per month. Part of the tax changes for 2021 was abolition of the above-mentioned annual ceiling. However, it was not until 2022 that the limit of the monthly bonus in the original amount of 5025 crowns was abolished, “explained Mazars tax adviser Gabriela Ivanco.
Food prices are high. And manufacturers will increase in price by ten percent in January
Average prices of butter, eidam and flour fell slightly in December compared to November, but are still at multi-year highs. This follows from the current results of the survey of average prices of selected products of the Czech Statistical Office. Basic foodstuffs in the Czech Republic have become more expensive in recent months, with a few exceptions – for example, Thursday’s butter has swung over 50 crowns – and this is following a trend from abroad. And it will be the same in the new year, as inflation should reach up to seven percent.
The impact of the minimum wage? For nurses and kindergartens
The increase in the minimum wage from the new year to CZK 16,200 will then affect the entitlement to a tax bonus, the calculation of minimum amounts for health insurance or kindergartens, the maximum amount of which corresponds to the minimum wage. “The minimum wage plays a role in the possibility application of a tax bonus, where the annual income must reach at least six times the minimum wage. That means 97,200 crowns for 2022“Hunal said.”
At the same time, the new amount of the minimum advance payment for health insurance from January 2022 will be CZK 2,627 due to the increase in the minimum wage, ie CZK 234 more. Hunal also pointed out that the tax exemption for regularly paid pensions is derived from the minimum wage. They are exempt from tax up to 36 times the minimum wage per year, which for 2022 corresponds to the amount of 583,200 crowns.
The flat tax will increase
The flat tax, which was introduced in 2021, will rise to 5,994 crowns per month next year from 5,469 crowns this year. Of this, the minimum health insurance premium is 2627 crowns, the minimum social insurance premium increased by 15 percent 3267 crowns and the income tax 100 crowns. About 75,000 entrepreneurs have so far registered for the flat tax. If the conditions are met, self-employed persons can submit a notification of entry into the flat tax scheme by 10 January. The tax is intended for self-employed persons who do not pay VAT with annual business income up to one million crowns. The conditions for entering the flat tax have not changed since 2021, Lodrová pointed out.
The flat tax is a loser. And because of inflation, it will probably remain so
People have the last two weeks to enter the flat tax regime. This year, interest in it fell short of expectations, which will probably be repeated next year, also due to rapid inflation.
According to experts, the flat tax is the most advantageous for self-employed people with a lower flat rate, who, however, do not apply tax discounts for children and their wives. After applying for a flat tax, entrepreneurs can no longer claim any deductibles, tax rebates, or tax benefits such as a mortgage or life insurance.
“A flat tax will not be paid, for example, to farmers and craftsmen applying an 80% flat rate. These include, for example, professions such as hairdressers, locksmiths, carpenters, butchers, bakers, brewers, goldsmiths, blacksmiths, masons, plumbers, watchmakers and road repairmen. On the contrary, it pays off for those who apply a 40% flat rate. Such professions include the so-called liberal professions, such as lawyers, architects or doctors, “said Michal Jelínek, V4 Group’s consulting partner. According to him, this tax will be paid to entrepreneurs with a 60% flat-rate expenditure only if they do not have children or a wife and their monthly income will be up to approximately 83,000 crowns.
Among others Changes since the new year include an extension of the income tax-exempt range or a new tax rebate for stopped executions.
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