Rising costs for businesses! Higher premiums from 2025 and changes to the system !
Rising costs for businesses: higher premiums from 2025 and changes to the system
From next year, entrepreneurs will face a significant increase in compulsory levies. The biggest increases will be in social insurance, which covers pensions, and in health insurance. Self-employed people using the flat-rate tax will also face a significant increase in the single levy, while this payment still eliminates the need to file a tax return. These changes are the result of the government’s consolidation package aimed at reducing the budget deficit. Premium increases will continue until 2026.
Changes from January 2025
From January 2025, the minimum deposit for social insurance will increase by CZK 907, while health insurance will increase by CZK 175. In total, entrepreneurs will pay CZK 1,082 per month, the largest single increase to date. The flat-rate tax in the first band will rise by CZK 1,218 per month, while in the second and third bands it will remain unchanged.
According to consultant Jakub Klíma from BDO, this increase is mainly due to a change in the calculation of the minimum social insurance assessment base. The minimum monthly deposit for social insurance will thus reach CZK 4,759 in 2025. For health insurance, the calculation remains dependent on the average wage, which will increase the minimum monthly advance to CZK 3,143.
Implications for entrepreneurs
Czech Labour and Social Affairs Minister Marian Jurečka defends the changes as a step towards a fairer system. He points out that self-employed persons in their main activity account for 12% of all economically active persons, but only contribute 6% of their income to the pension system. For example, in 2022, self-employed workers sent CZK 38 billion to the pension system, while employees paid CZK 633 billion. The increase in contributions is intended to gradually even out this disparity.
However, economist Petr Vilím of PAQ Research points out that these changes will hit low-income self-employed workers the hardest, whose contributions may approach the level of employees. On the other hand, high-income self-employed workers will benefit from higher flat tax limits. However, experts believe that the increase in mandatory payments will not deter most entrepreneurs from their activities. The greater risk lies in the tendency of some self-employed persons to conceal part of their income, which could reduce the effect of the planned increase in levies.
Support for start-ups and secondary activities
Under the consolidation package, new self-employed and secondary entrepreneurs have the option to pay lower amounts. For newly established self-employed persons, the minimum monthly deposit for social insurance will be set at CZK 3,399 in 2025. For secondary activities, the minimum monthly advance will be CZK 1,496. At the same time, the so-called decisive amount up to which the insurance premium does not have to be paid is increased. For 2025, this amount will be CZK 111,736.
Businesses should remember to increase their deposits as early as January 2025 to avoid complications. At the same time, when filling in the tax return for 2024, it is necessary to base it on the amounts valid for this year, as Klíma from BDO reminds.
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