Social & health insurance in The Czech Republic

Everybody working in the Czech Republic is liable to Czech social and health insurance payments. It is only in the case of short-term secondments that non-Czech nationals may be exempt from contributions to the Czech system. The system covers all employed and self-employed persons.
The general health insurance is provided by nine health insurance funds, which are independent entities under private law. People can freely choose their fund and their health care provider. Social insurance is governed by the Czech Social Security Administration (ČSSZ) which is a governmental body, and is also in charge of collecting social security insurance contributions.

MAXIMUM BASE OF ASSESSMENT

The maximum annual base of assessment for the calculation of social and health insurance payments is the same for both employees and entrepreneurs. It represents 48 times the average salary in the national economy. The maximum base of assessment for 2011 is in the amount of CZK 1,781,280 (EUR 74,000; USD 107,000). After the income cap is reached, no further contributions have to be made for the rest of the year. Therefore, the effective tax rate decreases from 21 % to 15 % after reaching this limit.

CROSS-BORDER EMPLOYMENT

Non-Czech nationals may be exempt from contributions to the Czech system of social and health insurance. This exemption can be claimed under EU provisions or a bilateral social security agreement. The EU provisions on social security coordination establish common rules and principles and ensure at the same time that the application of the different national legislations does not adversely affect persons exercising their right to move and to stay within member states. The Czech Republic has already concluded 14 social security agreements (e.g. with USA, Japan, Canada, Israel).

CONTRIBUTION RATES

The total amount of general health and social insurance in the Czech Republic is 45 % of the gross employee’s salary, social insurance is 31.5 % of it and health insurance amounts to 13.5 %. The statutory social and health insurance premiums payable by employers and employees are very high in the Czech Republic and complicated to calculate. There are differences in health duties calculations between small companies with up to 25 employees (calculated by Social Insurance Authority) and large companies over 25 employees (calculated by company).