Planned changes to the tax collection system for temporary workers and workers on agreements to perform work or to complete a job

In view of misleading and inaccurate information circulating in the media and on social networks regarding planned changes to the system of tax collection for temporary workers and workers on agreements to perform work or to complete a job, the Ministry of Finance of the Czech Republic has published an explanation on its website in an attempt to set the record straight.

The change in the tax collection system is related to the newly approved law on the Uniform Monthly Employer’s Reporting (“UMER”), which we have already informed you about in the article here.

The new system of tax collection is intended to significantly reduce the administrative burden for employers, on the other hand, employees should appreciate the automatic pre-filling of tax returns. The Financial Administration compares its efforts to collect taxes in the future to annual energy bills – ideally, the taxpayer would only receive an annual bill with the underpayment or overpayment automatically credited to their account, so they would not have to worry about anything else.

It is important to emphasize that the effectiveness of this part of the reform is postponed until the future, namely until the tax administration is ready not only thanks to the data from the UMER, but also technologically to provide an equally convenient process for people with irregular income – for example, temporary workers, students and other groups with small earnings.

For these groups, therefore, nothing changes in the result – they will be able to remain in the same regime in the future as today. The new concept will include the principle of self-assessment. If the taxpayer chooses not to file a tax return, they will not be obliged to do so. The tax will be pre-filled in the system and will be paid automatically – from the advance withheld by the employer at payday, in the same amount as today’s withholding.

The new system is scheduled to take effect for the 2027 tax year, which means that the first application of the new system will take place at the beginning of 2028. By that time, the tax administration will probably have practical experience with the use of data from the UMER and will be ready to take the necessary organisational and legislative steps.

Demonstration with examples

Work under an agreement (e.g. student job):

• Today: If he does not want to, the temporary worker does not file a tax return.
• Situation in 2027: Same regime – the temporary worker files a tax return on a voluntary basis.

Employee with additional income under an agreement to complete a job:

• Today: The employee files the return himself, or the income is taxed through the employer (after the end of the taxable period, the taxpayer must submit all supporting documents to the employer).
• Situation in 2027: The tax return will be automatically pre-filled, without the need for supporting documents from insurance companies, banks, etc. The return form will then be simply sent by the taxpayer via the system to the tax office.