The Czech Republic has taken a major step toward modernising its employment administration framework by approving the Unified Monthly Employer Report (JMHZ). The bill was adopted by the Chamber of Deputies on 27 June 2025, with overwhelming parliamentary support, and is scheduled to take effect from 1 January 2026.

The new system is designed to significantly reduce administrative burdens for employers by consolidating approximately 25 separate reports into a single digital monthly submission. Previously, companies were required to submit overlapping employee data to multiple authorities, including social security offices, labour authorities, the Ministry of Labour and Social Affairs, the Czech Statistical Office and tax authorities. Under the new framework, repetitive reporting will be eliminated, improving efficiency and data consistency.

A pilot phase of the digital reporting system is expected to begin before the end of 2025, allowing employers and government institutions to test and optimise the new process ahead of full implementation.

New Employer Registration Obligations

The reform also introduces stricter employer registration timelines. Companies will be required to register in the official registry no later than two days before the first employee begins work. If no employee ultimately starts, the employer must notify the authorities within eight days.

From 1 July 2026, employers will be required to register employees no later than the very first day of employment. Non-compliance may result in fines of up to CZK 20,000. For the transitional period covering January to March 2026, employers must submit separate monthly reports for each month, with a final submission deadline of 1 April 2026.

To further reduce duplication of data, access to the reported information has been extended to the Ministry of Justice and the Ministry of Education.

Income Tax Changes Linked to the Reform

The reform also includes important changes to Czech income tax rules.

From 1 January 2026, withholding tax on remuneration paid to individuals who are non-residents of the Czech Republic and serve as members of corporate bodies will be abolished. However, withholding tax will remain in force for legal entities performing such roles. This change aims to eliminate unequal tax treatment based on tax residency.

From 1 January 2027, a full abolition of withholding tax on certain types of dependent income is planned. This applies to low-value employment agreements and small-scale work arrangements that do not meet sickness insurance participation thresholds. In such cases, individuals who do not sign a taxpayer declaration will generally be required to file their own tax returns, unless they request their employer to perform an annual tax reconciliation.

For non-resident individuals serving as members of corporate bodies, the obligation to file a tax return will arise only if their annual income from these roles exceeds 36 times the national average wage.

Future Developments

In the second phase of the project, the Czech government plans to introduce automatic pre-filling of tax returns using data collected through the unified employer reports. This is expected to further simplify tax compliance for individuals and improve administrative accuracy.

The Unified Monthly Employer Reporting system represents one of the most significant labour and payroll reforms in the Czech Republic in recent years, with direct implications for employers, HR teams, payroll professionals, and international companies operating in the Czech market.