Wages in the Czech Republic are the highest among the Visegrad Group, but still far behind neighboring Germany and Austria. Taxes paid by Czech employers are also higher than average for the region.
The average monthly wage in the Czech Republic is the equivalent of EUR 1,533, which is an increase of 12 percent compared to the previous year, according to figures used by tax consultancy Mazars in their annual report for 22 countries in Central and Eastern Europe.
The Visegrad group also includes Slovakia, Hungary, and Poland. In Hungary, where the average wage is EUR 1,369, wage growth accelerated to 19 percent. Slovakia, with an average wage of EUR 1,185, saw 6 percent growth. Poland, with an average wage of EUR 1,301, saw a drop of 2 percent.
The latest data from the Czech Statistical Office (ČSÚ) puts the average wage in the Czech Republic in the first quarter of 2022 at CZK 37,929, an increase of 7.2 percent year on year, but after taking into account inflation, a drop in real terms of 3.6 percent.
The highest average wage in all of the CEE region, according to the survey by Mazars, is in Germany at EUR 4,130, followed by Austria at EUR 3,818. On the other hand, the lowest average wages are EUR 400 in Kosovo, EUR 450 in Bosnia and Herzegovina, and EUR 485 in Ukraine.
Differences in the growth of the average wage in euros were more pronounced in the region than before. Germany, where average wages rose by 14 percent based on the previous year's study, grew by only 4 percent. In Austria, by contrast, the average wage level grew faster, by 23 percent.
The study also found that taxes and mandatory employer contributions related to employment continued to decrease in the 22 CEE countries. On average, the ratio of employer's costs to gross wages for taxes and compulsory levies is 15 percent. However, there are significant differences among countries.
While in Romania and Kosovo, the levies amount to less than 5 percent of gross wages, in Poland, they are 20.48 percent, in the Czech Republic 24.8 percent for annual incomes up to EUR 76,330, and in Slovakia 35.2 percent.
Pavel Klein, chief partner of the tax department of Mazars in the Czech Republic, said that the Czech tax structure for employers was changing.
“Earlier this year, the new Czech government unveiled its tax plans, which aim, among other things, to reduce the administration associated with paying taxes and eliminate tax fraud. According to the published plans, the government is aware of a number of non-systemic tax exemptions, which are not of a social nature and should therefore be abolished,” Klein said.
The study also shows that Hungary and Croatia have the highest basic value-added tax (VAT) rates, at 27 and 25 percent, respectively. The average in the region is between 19 and 21 percent. In the Czech Republic, the basic rate is 21 percent, and in Germany, it is 19 percent.
In the case of corporate income taxes, Germany has the highest taxation, with a maximum amount of 31 percent. By contrast, some companies in Kosovo and Lithuania pay the lowest taxes, at 3 percent and 5 percent, respectively. Hungary, Montenegro, and Poland have a 9 percent rate. The standard corporate income tax rate in the region remains between 15 and 20 percent. The Czech Republic is at 19 percent.
In the case of personal income tax, nine countries have one tax bracket, such as Hungary, at 15 percent. More than half of the countries in the region have progressive taxation. In Austria, personal income tax goes up to 55 percent. Slovakia has three tax brackets, at 15, 19, and 25 percent. Poland has brackets of 17 and 32 percent, and the Czech Republic has 15 and 23 percent.
Delivered by CzechTrade team Canada