Social tax

Tax Base
Employers pay social tax on payments in cash and in kind made to natural persons. Sole proprietors pay tax on their business income. Employers and sole proprietors are both obliged to pay social tax not less than the amount calculated from the monthly rate provided for in § 21 of the Social Tax Act (in 2016, the minimum monthly basis for social tax is 390 euros). Sole proprietors also have an upper limit- the maximum basis for social tax is the amount calculated from fifteen-fold minimum wage (in 2016 the minimum wage is 430 euros per month and the maximum basis for social tax payable by sole proprietors is thus 15*12 months*430 euros).

The law enacts several special cases of paying social tax when the tax is paid by the state and the rural municipality or city, e.g. for persons receiving unemployment benefits or child care allowances.

Tax Rates
Social tax rate is generally 33 per cent, in particular special cases 13 per cent of the taxable amount. Taxes are due monthly and the remittance of tax is made congruent with the remittance of withholding tax; the tax is paid by the 10th day of the following month. Taxable period for business income of sole proprietors is a calendar year, whereas quarterly advance payments of tax are due.
From 2017 the social tax rate will be 32,5 per cent and will be reduced to 32 per cent from 2018.

Tax Allocation
The social tax is personalized and the amounts paid will be taken into account when making pension payments. Tax accrues to the budget of state health insurance fund (13%) and pension insurance fund (20%; 16% + 4% in case of persons who have joined the second pillar of the pension insurance system).