Establishing and running payroll in the Czech Republic
The Czech Republic, also known as Czechia, is a relatively small country in Central Europe with a rich and diverse history and culture. The country has experienced massive economic growth in recent years, and now has some of the highest standards of living in Europe, as well as a wealth of opportunities for foreign businesses interested in expanding.
If your organization is looking to build a presence in the country, it is likely that you’ll need to hire locally and set up a Czech payroll or Czech Republic payroll outsourcing system. This can be a difficult process, with complicated, frequently changing labor laws often slowing down expansion progress for weeks or months on end.
At Horizons, we help businesses of all kinds to expand their operations overseas with our Czech Republic payroll outsourcing services. We can take care of your organization’s payroll setup and management, giving you the flexibility to work on your expansion into the Czech Republic, even if you haven’t established a legal entity in the country.
Why choose the Horizons payroll solution?
If you have an entity
Do you already have a registered subsidiary in the Czech Republic? We provide payroll outsourcing services to help you set up and run your Czech Republic payroll. Your entity will be the employer of record, but we are here to handle all the HR, administration, tax compliance, and more, using our expertise in Czech regulations so you can focus on growing your business.
If you don’t have an entity
If you haven’t established an entity in the Czech Republic, our dedicated Czech subsidiary can work as your employees’ official employer of record. Our team will handle all of your Czech Republic payroll outsourcing, contracts, associated legal work, and associated administration, helping you focus solely on a successful expansion.
Czech Republic payroll guide
Withholdings and taxes in the Czech Republic
There is a legal requirement for employers in the Czech Republic to pay 25% of employee salaries toward social security schemes.
Employees in the Czech Republic must pay 15% in income tax, and an additional 7% ‘solidarity tax’.
The corporate tax rate in the Czech Republic is 19%.
Entitlements and terminations in the Czech Republic
Both employees and their employers must give at least a two-month notice period when terminating an existing contract of employment. These rules do not apply to workers in probation periods, which can last up to three months,
If an employee is terminated without proper cause, their employer may be required to make a severance payment. For employees who have been with a company for under one year, severance of one month of salary must be paid. For employees of between one and two years, severance rises to two months of salary. For employees of more than two years, the minimum payment is three months of salary.
How to set up and run Czech Republic payroll outsourcing
Importantly, you will generally have to register an entity before setting up an in-country Czech Republic payroll system. This process can take months or even longer in some cases, and requires a solid understanding of the regulations to ensure legal compliance.
At Horizons, we provide outsourced payroll setup and management as well as our Czech subsidiary for you to use as employer of record, so our solutions are suitable whether or not you’ve already established an entity in the Czech Republic. Additionally, we can set up and manage your HR, taxes, contracts, and more to make your expansion as straightforward and seamless as possible.
Manage payroll in Czech Republic
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.