The turn of the year is always accompanied by an increase in the minimum advance payments for self-employed persons (OSVČ). So the question is not if, but by how much they will grow next year.
In order to determine the minimum deposits, we need to know the data from the government regulation issued annually.
Currently, the Ministry of Labor and Social Affairs has already submitted a proposal for this regulation, which sets the general assessment basis for 2021 and the conversion coefficient for its adjustment, which is based on statistics for the first half of 2022. Together they describe the growth of average wages and the result of their product is the expected average salary in 2023.
Average salary in 2023
The aforementioned regulation has not yet been definitively approved. In the event that there are modifications, we will inform you about the changes.
From the proposed material, we find that the general assessment base corresponds to the amount 38,294 CZK and the conversion factor is then 1,0530. The average salary for the year 2023, after rounding up to the whole CZK, is estimated at 40,324 CZK. This year, the average salary was CZK 38,911.
Social insurance 2023
Social security deposit, or we derive pension insurance from the profit achieved – more precisely, the tax base. The self-employed person’s assessment base is set as one-half of its twelfth – i.e. if the activity is carried out throughout the year. The insurance rate is 29.2%.
If the assessment basis is lower than the specified minimum assessment basis, the minimum assessment basis applies to you. It means that you will pay a specified minimum deposit for the insurance premium.
Minimum deposit for main activity
To calculate the minimum deposit for the main activity, we need to calculate the minimum monthly assessment basis. We set this as one quarter of the average salary, which we rounded up to the whole CZK, i.e CZK 10,081.
We calculate the minimum social security deposit for 2023 as 29.2% of the minimum monthly assessment base. Again, we round up to the whole CZK. We will get 2944 CZK.
Annual minimum assessment base for an activity that lasted a whole year (12 months), it corresponds to the amount 120,972 CZK (10,081 × 12). If the activity did not last a whole year, the minimum assessment base is multiplied by the number of months in which the activity actually lasted.
Maximum assessment base on the other hand, it will be calculated as 48 times the average salary, so it will be for the next year 1,935,552 CZK. If your annual income for the year 2023 exceeds this limit, you will not pay further pension insurance from this limit.
Minimum deposit for secondary activity
A secondary activity is carried out, for example, by a self-employed person who runs a business while working, studying, on maternity leave, while receiving parental allowance or in retirement.
To calculate the minimum deposit for a secondary activity, we need to know the minimum monthly assessment base for the secondary activity. We set this as one-tenth of the average salary, which we round up to the whole CZK. It will come out 4033 CZK.
We will then calculate the minimum deposit as 29.2% of the minimum monthly assessment basis for secondary activity, again after rounding up to whole CZK. It will come out 1178 CZK.
The annual minimum assessment basis for a secondary activity that lasted for the whole year (12 months) corresponds to the amount CZK 48,396 (4033 × 12). If the activity did not last a whole year, the minimum assessment base is multiplied by the number of months in which the activity actually lasted.
Decisive amount for secondary activity
In 2022, the decisive amount at the product of the general assessment base of CZK 36,119, the conversion coefficient of 1.0773 and the coefficient of 2.4 corresponds to CZK 93,387 after rounding.
Next year, the amount of the so-called discretionary amount will also change. This affects the fact whether a self-employed person performing a secondary activity must or does not have to participate in pension insurance (self-employed persons performing a main activity are always obliged to participate). If the income from the secondary activity, after deduction of expenses, reaches at least a decisive amount, participation is mandatory.
The decisive amount for secondary activity is determined as 2.4 times the number obtained by multiplying the general assessment basis for the calendar year, which is two years before the calendar year for which participation in the pension insurance is assessed, and the conversion coefficient for its adjustment. That is, the values that we mention at the beginning of the article. Unlike the calculation of the average wage itself, it is not rounded up during the process – only at the end, and again up to whole crowns.
We get the decisive amount for 2023 as 38,294 × 1.0530 × 2.4 = 96,777 CZK.
In the event that your income from a secondary activity after deducting expenses for 2022 does not exceed this limit, you do not have to pay pension insurance for that year and in 2023 you do not have to pay any advances. However, not paying a deposit does not always mean avoiding insurance premiums. Again, it depends on what your income will be after the end of 2023 after deducting expenses. The result will determine whether you will have to pay the insurance premium for that year retroactively. If you exceed the decisive amount, you will also pay advances in the following year.
In the event that your activity does not last the whole year, this decisive amount is reduced by one-twelfth for each month in which you did not perform a secondary independent activity or were entitled to sickness, long-term care or cash maternity assistance as a self-employed person for a whole month. I.e. by 7,783 CZK for the year 2022 and 8065 CZK for the year 2023 (again we rounded up to the whole CZK).
New backups after overview
Pension insurance advances are paid in the calendar month to which the advance applies. The January deposit is therefore due in January. You should transfer the payment to the CSSZ account from the first to the last day of the month.
If you continue to do business next year 2023, you will pay the new amount of advances only from the month following the one in which the Self-Employed Income and Expenditure Statement for 2022 is submitted (or should be submitted). If you were to start your business next year , you will be subject to minimum deposits valid for 2023 from the start of the activity.
|Data valid for the year||2018||2019||2020||2021||2022||2023|
|Average wage||29,979 CZK||32,699 CZK||34,835 CZK||35,441 CZK||38,911 CZK||40,324 CZK|
|Minimum deposit (main activity)||2189 CZK||2388 CZK||2544 CZK||2588 CZK||2841 CZK||2944 CZK|
|Minimum deposit (side activity)||876 CZK||955 CZK||1018 CZK||1036 CZK||1137 CZK||1178 CZK|
Source: author’s calculations
Health insurance 2023
To calculate the minimum advance payments for health insurance for the year 2023, we also need a general assessment basis (CZK 38,294) and a conversion factor (1.0530), from which the average salary for the next year (CZK 40,324) was determined.
The assessment base for the calculation of health insurance advances corresponds to one half of the income achieved after deduction of expenses. Whether it is actually spent or applied as a flat rate.
If you carry out a so-called secondary activity (e.g. you run a business while working or studying, in retirement, on maternity leave, while receiving parental allowance), then the minimum assessment basis does not apply to you.
You have to pay health insurance deposits only from the second year of business, and only from the actual profit for the previous year. Employees who run a side business do not have to pay advances at all. The insurance premium derived from the actual profit will always be paid after the report has been submitted.
The health insurance rate is 13.5% and is multiplied by the amount of the assessment basis. This cannot be lower than the minimum assessment base derived from the average monthly salary (CZK 40,324), or half of it, i.e. the amount 20 162 CZK (in the case of a non-integer number, we round). The maximum assessment base is not set for health insurance.
We therefore multiply half of the average monthly salary by the health insurance rate of 13.5% and, after rounding up to whole kroner, we get the minimum advance for health insurance for 2023 in the amount of 2722 CZK.
The health insurance advance, unlike the social insurance advance, must be paid by the 8th of the following month.
The new amount of the minimum deposit is always paid from January. If you are already paying more than the minimum deposit that will apply next year, your deposit will not change until one month after submitting the self-employed person’s report for 2022, which you must submit no later than one month after submitting your tax return.
|Minimum assessment base||14,990 CZK||16,350 CZK||CZK 17,418||17,721 CZK||19,456 CZK||CZK 20,162|
|Minimum deposit||2024 CZK||2208 CZK||2352 CZK||2393 CZK||2627 CZK||2722 CZK|
Source: author’s calculations
The deposit for OBZP is not yet clear
The calculation of the minimum advance for health insurance for persons without taxable income (OBZP) is derived from the amount of the minimum wage for the given year. It amounts to 13.5% of the current amount of the minimum wage for the given year and is rounded up to whole crowns, if necessary.
It is not yet clear whether the minimum wage will also increase for next year, so it is not yet possible to determine with certainty even the amount of the minimum advance for OBZP.
The category of persons without taxable income includes in particular:
- unemployed persons who are not registered with the employment office as job applicants,
- women (or men) in the household who are not among the persons for whom the state pays insurance premiums – i.e. they do not take care of at least one child under the age of 7 or at least two children under the age of 15 all day personally and properly, nor do they receive any pension from the pension insurance nor are they registered with the employment office as job applicants,
- students at a secondary or university in the Czech Republic, which has not been designated by the Ministry of Education as continuous preparation for a future profession (certain language schools, retraining courses, etc.)
- students who are studying at a high school or university in a foreign country that has not been placed on the same level as studying in the Czech Republic by the Ministry of Education, and who have not made a notification of long-term residence,
- students older than 26 years,
- secondary school graduates who, after finishing school, do not start a job immediately after the holidays, do not register as job seekers or start a business,
- university graduates who do not continue their studies and do not start a job or start a business immediately after the end of the calendar month following the passing of the state final exam,
- members of a religious order without income.
As you can see, the minimum payments for social security and health insurance will increase, but it won’t be the jump we saw between 2021 and 2022.