Crisis measures for social security and health insurance UPDATE01
Currently, when measures are being taken due to the coronavirus epidemic, a number of questions arise regarding the payment of social security and health insurance premiums. In addition, self-employed persons are resolving, for example, how the permitted late filing of income tax returns will affect the deadline for submitting an overview of income and expenditure for 2019 and the payment of insurance premium supplements and other advance payments.
Self-employed persons and social security
When to submit an overview of income and expenditure for 2019?
On 25 March 2020, the Czech Social Security Administration responded to the possibility of filing personal income tax returns for 2019 without sanctions until 1 July 2020. It stated on its website that self-employed persons can provide an overview of income and expenditure for the year 2019 until 3 August 2020 without sanctions. Please note that sanctions will be waived only if the self-employed person actually reports on income and expenditure by August 3, 2020 and at the same time pays the supplementary payment of the premium on that date. If the income statement is not submitted by 3 August, 2020 and the insurance premium is not paid, the sanctions under this measure will not be waived. Any remission of the penalty for late payment of the premium would have to be applied individually. In this respect, the CSSA measures differ from those adopted in public health insurance, which you will read below.
How should monthly advance payments for social security be paid?
On 27 March, 2020, the Act on Certain Social Security and State Employment Policy and Pension Insurance Contributions Act was passed in the Collection of Laws, according to which the compulsory advance payments for all self-employed persons for 6 months have been waived from March 2020 until August 2020. Thus, a self-employed person need not pay advances for the months of March to August 2020. However, if certain advances are paid, they will be used to pay arrears and advances due in September 2020 and later.
In addition, the law benefits all self-employed persons by waiving a certain portion of the premium for the six months in which at least part of the month the person was self-employed, amounting to CZK 2,544 per month for self-employed as a main activity and CZK 1,018 per month for those who are self-employed as a side business activity. Practically, this means that in the framework of the accounting for 2020, the self-employed will pay a total of premiums reduced by up to CZK 15,264, respectively CZK 6,108.
However, the above measures do not apply to sickness insurance premiums in which the self-employed person voluntarily participates. If the self-employed person wishes to remain insured, the premium must continue to be paid further. If the self-employed person fails to pay the premium, the participation in the sickness insurance expires.
Will the period from March to August 2020 be included in the calculation of pension revenue?
For the stated period, advances will be considered as paid and hence this period will also be considered as a period of pension insurance. In addition, in order not to reduce the average income for calculating the percentage assessment of pension, this period will be considered as the so-called excluded period for self-employed persons undertaking self-employment as their primary business activity.
Self-employed persons and health insurance
When to submit an overview of income and expenditure for 2019?
On the same day, a law was also presented in the collection of laws amending the Act on Public Health Insurance. According to this Act, the deadline for submitting overviews of income and expenditures for 2019 is shifted from 4 May 2020 to 3 August 2020. Thus, self-employed persons can report on income and expenditures for 2019 up to 3 August 2020 in the same way as in the case of the overview of social security.
With regard to health insurance, a different solution was chosen than in the case of taxes and social security. The postponement of the deadline will ensure that there is no need to waive any penalties for late submission until 3 August 2020. Possible penalties due to non-payment of premiums or other advances would only start from 22 September 2020.
How to pay advances for health insurance?
All self-employed persons are also waived the obligation to pay advances in the period from the beginning of March to the end of August 2020. Should the self-employed persons pay the advances anyway, they will be deemed to have paid an advance on premiums for September 2020 and later. Moreover, for the period from March to the end of August 2020, all self-employed persons receive the benefit of premiums calculated from the minimum assessment base for 2020, i.e. up to CZK 14,112. The self-employed will thus pay less for this amount when accounting is undertaken for the 2020 period.
However, in the case of persons who do not have income from self-employment (they are not self-employed persons), the income from dependent activities is not covered by the state, i.e. from the perspective of public health insurance we are talking about persons without taxable income and the obligation to pay premiums is not waived. They are still obliged to pay a premium of CZK 1,971 per month. In the case of late payment of the premiums for the period from March to the end of August 2020, this late payment shall not be penalized until 21 September 2020. The waiver of penalties shall apply only to late payment of the premiums for the months of March to August 2020. This applies, for example, to persons who only have income from the rental of immovable property.
Employers and social and health insurance payments
The waiver of the obligation to pay advance payments for the period from March to the end of August 2020 does not apply to the payment of insurance contributions paid by the employer on behalf of employees.
However, employers also have some relief in the area of health insurance. Should they pay their employees' insurance premiums for the period from March to the end of August 2020 with some delay, such late payment will not be penalized until 21 September 2020. However, please note that the remission of the penalty only applies to insurance payments for the period from March to the end of August 2020, not in February 2020 and earlier, nor in September 2020 or later.
In the area of social insurance payments paid by employers for their employees, no concessions have been introduced so far. Similarly, employers must continue to deduct and pay tax advances to their employees within the statutory deadlines.
Information for migrants
The Czech Social Security Administration has published on its website information for migrants insured in the Czech Republic who work in several EU / EEA Member States or Switzerland. The current emergency does not cause a change of state insurance, if these persons continue their activities in other states even after the end of current restrictions. Therefore, neither the employer nor the working persons have to report the change of situation or return the A1 certificate issued to the relevant social security administration.
The government updates the measures taken every day, and we will keep you posted on our blog on further progress in the area of social security and health insurance