Recently an amendment of the Czech tax legislation was approved which brings new tax rules and obligations to be implemented during 2026. The amendment brings change in the income tax treatment of members of Czech statutory bodies, defines new kind of qualified equity plans for which specific tax treatment will be applied, as well as introducing new payroll reporting obligations for all employers.
Abolition of withholding tax for members of the statutory bodies of Czech legal entities (statutory representatives) who are Czech tax non-residents.
Currently, the remuneration of statutory representatives who are Czech tax non-residents is taxed at a final withholding tax rate of 15%.
The new legislation introduces a change in the taxation regime, whereby remuneration will remain fully taxable in the Czech Republic, but as of January 1, 2026, it will be subject to payroll tax prepayments and progressive tax rates of 15% and 23% depending on the level of their income. If the statutory representative income reaches a threshold for application of the 23% tax rate, statutory representatives will be required to file a Czech personal income tax return starting in 2026.
This change applies only to individuals; application of withholding tax for companies will remain unchanged.
Introduction of a Unified Monthly Employer’s Report
Starting April 1, 2026, all employers will be required to submit a “Unified Monthly Employer’s Report” (“JMHZ”). The aim of the JMHZ project is to simplify the administrative burden on employers’ side and
streamline their communication with the state in the future. The JMHZ will replace the reports that employers currently send to various institutions (Ministry of Labor and Social Affairs, Czech Social Security Authorities, Czech Labor Office, State Labor Inspection Office, Tax Office, Czech Statistical Office). In the initial phase, health insurance companies will not be included in the project, meaning that the existing agenda towards health insurance companies will remain in place also in 2026.
The new legislation governing JMHZ will be effective from January 1, 2026, with the first mandatory report to be submitted by employers for April 2026, specifically by May 20, 2026. Additionally, from April 1, 2026, to June 30, 2026, all employers will have to retroactively submit the JMHZ for the period from January 2026 to March 2026.
The Ministry of Labor and Social Affairs strongly urges all employers to verify with their payroll software providers that they are actively working on the JMHZ implementation already.
Introduction of new rules for the taxation of qualified employee stock options
Effective January 2026, the Income Tax Act will define a new category of option plans that, upon meeting certain conditions, will be subject to a more favorable tax regime. Specifically, if the conditions set by the law are met, the income of individuals from exercise of a qualified options will not be considered an income from a dependent activity but rather an “other” income under § 10 of the Income Tax Act. Such an income would not be subject to social security and health insurance contributions then.
Qualified option plans will primarily target so-called start-ups with an annual turnover not exceeding CZK 2.5 billion and total assets of CZK 2 billion, unless they are members of a group whose turnover or total assets exceed these limits. The new rules for the taxation of income from qualified employee stock options cannot be also exercised at banks, insurance companies, reinsurance companies, organizations under the Mining Act, lawyers, tax advisors, and auditors.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Petra Bobková
Managing Director
Zdeněk Drozd
Senior Manager
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