CZECH REPUBLIC Law and Practice Contributed by: Petr Mlejnek, Robert Klenka, Matěj Manderla, Jan Wagner, Ivo Hartmann and Arbër Balliu, Tenacta, advokátní kancelář, s.r.o.
5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
• employees on parental leave; • employees temporarily incapable of work; and • employees affected by work-related injuries or occupational diseases. Failure to comply with statutory requirements may result in termination being declared invalid. 4.5 Employee Representations Employee representation is not automatically manda - tory in all businesses; however, Czech law permits employees to establish representative bodies where statutory requirements are satisfied. Forms of employee representation commonly include: • trade unions; and • works councils. Trade unions generally exercise broader rights than works councils and may participate actively in nego - tiations concerning working conditions and collective agreements. Employee representatives may also possess rights relating to: • access to information; • consultation procedures; • workplace conditions; • organisational restructuring; and • collective redundancies. Employers may therefore be required to inform or con - sult employee representatives before implementing particular decisions affecting employees. In practice, the significance of employee representa - tion varies substantially depending on the size of the employer, the industry involved and historical labour practices within the relevant sector. While employee representation structures are com - mon in larger organisations and industrial businesses, smaller employers frequently operate without formal representative bodies.
Please note that this tax overview is intended to pro - vide only a brief and high-level summary of selected legal and regulatory aspects. We do not provide tax, accounting, or audit services, and any references to tax or accounting matters are included for general informational purposes only. Individuals who are tax residents of the Czech Repub - lic are generally subject to taxation on their worldwide income, while non-residents are generally taxed only on income derived from Czech sources. Employment income is generally subject to personal income tax and mandatory social security and health insurance contributions. Employers are responsible for withholding and remitting employment-related taxes and contributions on behalf of employees. Mandatory payments in employment relationships generally include: • personal income tax; • social security contributions; and • public health insurance contributions. The applicable level of taxation and contributions depends on various factors, including income levels, available exemptions and specific employee circum - stances. Cross-border employment arrangements may addi - tionally require consideration of: • double taxation treaties; • social security co-ordination rules; • tax residency issues; and • permanent establishment risks. 5.2 Taxes Applicable to Businesses Companies with a registered seat or place of effec - tive management in the Czech Republic are generally subject to corporate taxation on worldwide income. Non-resident entities are generally taxed only on Czech-source income.
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