2021 Tax Bundle
We would like to briefly inform you of the selected changes brought about by the “tax bundle”. The respective collection of amendments was published in the Collection of Laws on 31 December 2020 and is effective from 1 January 2021. However, some provisions may already be applied to the year 2020.
Cancellation of super-gross wage and solidary tax increase
From the start of 2021, the super-gross wage and seven-percent solidary tax increase have been cancelled. At the same time, two tax rates have been introduced:
- a 15% tax rate shall apply to incomes of up to 48 times the average wage (meaning about CZK 140,000 per month);
- a 23% tax rate shall apply to incomes which exceed this limit.
Basic discount per taxpayer
The basic discount per taxpayer for 2021 has increased by CZK 3,000 to CZK 27,840 (meaning CZK 2,320 per month). For 2022 it shall be CZK 30,840.
Monetary contribution to meals
From the new year, employers can contribute a financial contribution to meals which is not subject to tax or insurance levies. The option of providing meal tickets and corporate dining still remains. The limit of the financial contribution and meal ticket is the same – for 2021 maximally CZK 75.60 per one shift.
Increase of the limit for writing off tangible assets to CZK 80,000
The existing limit for the recognition of tangible assets is increased from the current CZK 40,000 to CZK 80,000. The increase of the limit also applies to the technical appreciation of assets. The new limit can also be applied to asset items and technical appreciation purchase, respectively completed in the course of 2020.
Extraordinary write-offs of tangible assets
The tax bundle presents extraordinary write-offs of assets recognised in the first and second depreciation groups. Tangible assets in the first depreciation group (e.g. computer equipment) can be written off in 12 months (instead of the standard three years). In the case of the second depreciation group (automobiles, machinery), assets can be written off in 24 months (instead of five years), with up to 60% of the input price over the first 12 months. The use of extraordinary write-offs is voluntary and applies to assets purchased from 1 January 2020 to 31 December 2021.
Cancellation of tax write-offs of intangible assets
The provisions on tax write-offs of intangible assets have been cancelled in the Income Tax Act. Accounting write-offs of intangible assets shall constitute the tax expense. The new legislation may be applied to intangible assets purchased form 1 January 2020.
Reporting exempted incomes from abroad
Henceforth, it will suffice to report incomes once per year, by 31 January of the following year. Furthermore, it will be necessary to report only incomes which exceed CZK 300,000 per month – instead of the current limit of CZK 100,000.
We will be happy to advise you how to optimally use the tax bundle.
Your team at WTS Alfery