The government promises to simplify the administration for employers with the new law on the so-called Uniform Monthly Employer Reporting (UEMR). On Wednesday 23 April, MPs supported it in the first reading. According to the proposal, employers would no longer submit about 25 different reports, but only one summary report and only to one authority. The change should take place from the beginning of next year.
This is a crucial project in the digitisation of the state administration. In the future, employers should submit one form per month instead of sending different forms to different authorities, within different deadlines, and this should reduce the number of certificates and documents issued. At the same time, the public administration will receive individualised data on employees and their dependent activities. This is a significant difference from the current mostly aggregated data reported for employers. The large amount of data that employers are now obliged to record internally will be provided under the JMHZ directly to the competent authorities, which have so far only had access to it during inspection activities on request.
While employers currently have to send two dozen forms to several different offices, the new system would leave only one. Each month, the data would be received by the Czech Social Security Administration (ČSSZ) managed by the Ministry of Labour and Social Affairs (MPSV). The Ministry would also be responsible for transmitting the relevant data to other state authorities.
State administration gets up to 400 data in one form
In addition to the Ministry of Labour and Social Security and the Czech Social Security Administration, the Labour Office, the Czech Statistical Office and the Financial Administration are also participating in the project of the single monthly employer report in the initial phase. Each of the authorities has defined the data it needs for the performance of state administration in a given area. In total, there may be up to approximately 400 data points. The state administration will thus now have individualised data on employees on a monthly basis.
In particular, this should include information on employees' income, withheld tax advances, discounts applied, insurance premiums, corrections made to levies, results of the annual settlement of tax advances, etc. At the same time, the JMHZ should contain aggregate data for employers such as total insurance premiums, total withheld advances or number of employees, again on a monthly basis. The format and content structure of the JMHZ will be determined by a regulation of the Government of the Czech Republic. The CSSA will then publish the data structure of the report.
The introduction of JMHZ will require major interventions in payroll software
Employers should submit the JMHZ by the 20th day after the end of the month, with the first submission for January 2026 by 20 February 2026. The JMHZ is to be submitted electronically on a mandatory basis, so major modifications to payroll software will be required. For smaller employers who do not wish to invest in payroll software modifications, the option of using the electronic application of the CSSA portal will be available. However, manual completion can be quite challenging. The data will then be automatically processed and communicated to the authority that has defined the data. This should eliminate the duplication of communicating similar data to different authorities through a large number of forms with different deadlines.
However, health insurance companies are not involved in the project. Obligations towards them (registration, notification of changes, overview of premiums) will therefore probably remain for employers beyond the scope of the JMHZ.
At the same time, the Financial Administration is preparing an application for pre-filling tax returns with data obtained from the JMHZ or the possibility of continuous viewing of the personal tax account on the My Taxes portal for employees.
Employers will be subject to registration and possible penalties for non-compliance
In order to be able to communicate data through the JMHZ, employers will have to be registered as employers with the ČSSZ (employer register). Employers will be obliged to register all their employees (even from uninsured activities) in the register of employees kept by the CSSA. Once an employee has been registered in the register of employees, he/she will be assigned a social security number, , which will be unique for each employee and unchangeable for further employment. An employment identifier will then be assigned to each job.
For offences in the form of non-compliance with the obligations set out in the Act on the Uniform Monthly Employer Reporting, the CSSA will be entitled to impose relatively significant fines.
The law provides for the abolition of withholding tax
In connection with the introduction of the JMHZ, the legislator proposes amendments to related laws. Some of these changes are logical consequences of the introduction of the JMHZ (abolition of various types of notifications, reports and statements, introduction of new registers, abolition of the obligation to register the taxpayer, postponement of the deadline for the application for the annual settlement, etc.)
However, the proposed amendment also contains one major change to the Income Tax Act, namely the abolition of withholding tax on income from employment. Specifically, the 15% withholding tax on income from dependent activities is currently applied to income from small-scale dependent activities (income below CZK 4,500 per month) or income from agreements on the performance of work (DPP, income below CZK 11,500 per month) in the case where the employee does not make a taxpayer declaration. These incomes should now become part of the normal tax base and thus subject to progressive tax rates.
More than one person would have to file a tax return
The amendment provides for the abolition of withholding tax for DPP and small-scale employment from 1 January 2027. This may lead to a more substantial expansion of the range of employees who are obliged to file tax returns. If similar income is not subject to withholding tax but to advance tax, employees may be obliged to file a tax return on account of small earnings.
The abolition of withholding tax on the income of members of corporate bodies, Czech tax non-residents, is expected to change as early as 1 January 2026. A very significant impact will be that such income will be subject to progressive taxation (tax rate of 15% up to 36 times the average wage and 23% above this threshold). When exceeding the progressive taxation threshold for a given year, such non-tax residents would be obliged to file a tax return.
However, ANO wants to block the withholding tax proposal until the end of the election period. The question remains as to what wording and whether the bill will pass the lower house at all.
Autor: Monika Lodrová