On 8 September, 2011, the Chamber of Deputies of the Czech Parliament received a government bill related to the establishment of a single collection point and amending certain tax and insurance laws, in particular Act on public health insurance, and Act on social security and state employment policy contributions.
The proposed changes should also apply to severance pay, which is currently only subject to income tax payments, but not to withholdings of social security and public health insurance. Pursuant to the proposed amendment, severance payments should be subject to standard insurance withholdings, which are to be increased from 11 % to 13 % (health insurance withholdings are to be increased from 4.5 % to 6.5 %) of the gross salary.
Insurance payments are to be withheld from all types of severance payments, gratuities and pay-offs, special bonuses paid upon the expiry of the term of office, bonuses payable under the act on inventions, innovations and improvement proposals if the development and application of the invention or improvement proposal was unrelated to the employment, and one-off social allowances provided to an employee to overcome an extraordinary difficulty caused by an act of God, fire, environmental or industrial accident, or any other serious event or condition.
The Senate returned the bill to the Chamber of Deputies on 8 December, 2011.
Petra Sochorová, Senior Associate
Petra Bohůnová, Associate
Source: Havel, Holásek & Partners s.r.o.; Legal News, December 2011
