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Czech Republic: tax treatment for supplementary pension insurance

Czech Republic
17/08/2005
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Greater tax incentives are to be given for supplementary pension insurance and life insurance from 2006.

The changes recently announced by the Ministry of Finance are intended to encourage employers to provide employee benefits for their employees. They will make both supplementary pension insurance and life insurance more attractive not only to individuals but also to employers who provide - or are considering providing – these benefits.

The main changes include:

  • Increasing (from 3% to 5% of an employee's gross salary) the maximum tax-deductible amount of employer contributions to supplementary pension insurance;
  • Combining the maximum annual contributions to supplementary pension insurance and life insurance which participants can subtract from their annual tax base. Currently, contributions to each are limited to CZK 12,000 a year but, from 2006, the combined limit will be CZK 24,000. This means that it will not be necessary to have both forms of insurance to get the maximum tax benefit.

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