Wage tax card requirements in 2017

Amendment to the Income Tax Act poses new demands regarding wage tax cards.

An amendment to the Income Tax Act has introduced new requirements for wage tax cards, among them information on the annual tax billing, on the amounts paid towards social security and public health insurance, and on the solidarity surcharge.

In this respect, the internal revenue service issued a memo on 20 December 2016 on what the wage tax cards for 2015 and 2016 should look like, and on the compliance required from 2017 onward. According to the information in that memorandum, the tax administration will accept, with regard to 2016, wage tax cards in which the annual billing information for 2015 is missing. However, from 2017 onward, the authorities expect that the payroll accounting software of all companies has been upgraded such that the wage tax card for 2017 contains the proper annual tax billing information for 2016. The finance office’s argument is rather sound, given that the annual tax billing for 2016 will be reflected in employees’ pay slips in 2017.

Sec. 38j (10) of the Income Tax Act stipulates that the taxpayer also must specify in the wage tax card the amounts of social security contributions (and of the mandatory payment towards the government’s employment policy) and of the public health insurance premiums which the tax subject must pay on its income. The wage tax card shall also include the amount for both these payments covered by the employer, which is a part of what is known as the “super-gross wage”, forming the tax assessment base and as such a mandatory requirement for wage tax cards, as mentioned above. While it is not strictly necessary in the latter case to differentiate between social security and health insurance, it is common practice to list them separately in the wage tax card, so as to allow for a check of the assessment bases for both forms of insurance individually.

The Income Tax Act mentions the wage tax card in one more context: Sec. 38h (3) concerning the solidarity surcharge on tax. The wage tax card must for each calendar month specify the 7% difference between income included in the assessment base for calculating the advance payments on wage tax, on the one hand, and the amount of four times the average earnings determined pursuant to the Act on Social Security Contributions, on the other hand.

Source: Amendment to the Income Tax Act No. 105/2016 Coll.

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