U.S. persons are subject to the Totalization Agreement on Social Security between the Czech Republic and the United States. The U.S. and Czech Republic entered into force on January 1, 2009. The U.S. and Czech Republic amended the agreement in Prague on September 23, 2013, but the change did not enter into force until May 1, 2016. The agreement relates to laws governing Federal old age, survivors, and disability insurance program on the U.S. side, and the Pension Insurance Act, Social Insurance Contribution and State Employment Policy Premium Act and the Act on Public Health Insurance on the Czech side.
Until December 31, 2014, the Czech Public Health Insurance Act did not extend access to public health Insurance to persons who lacked permanent residence in the Czech Republic. On January 01, 2015, legislators amended the Czech Public Health Insurance Act to bring it into accordance with EU regulations, requiring all persons whose direct employers had a place of business in the Czech Republic to enroll in the public system. By implication, seconded employees having health insurance through a sending employer or international health insurance provider and self-employed (who are their own employer) needed also to register and pay into the Czech public system.
U.S. and Czech negotiators brought the totalization agreement into harmony with effect from May 1, 2016, exempting seconded employees from the Czech public health insurance mandate, but mandating self-employed persons with a place of business in the Czech Republic to register! system.
The implication for self-employed persons in the Czech Republic is that regardless of commercial insurance already purchased to meet visa requirements, registration and payment of advances and associated penalties and interest from May 1, 2016 is a reality. It is possible that individual health insurance companies may approve a process for abatement of penalties under certain conditions; taxpayers are urged to contact their health insurance provider.
Newly-obligated payers must now register and pay delinquent advances, and file an annual health insurance return in April just like they already do for social insurance. The annual amount of health insurance due will be 6.75% of the taxable base (revenue less itemized expenses and adjustments or 40% of revenue if the pausal method is elected) since May 1, 2016. The minimum monthly advance amount for health insurance (which would apply to persons who become subject to the change on May 1, 2016 is 1,823 Kč/month, or 14,584 kč for the year. This one-off payment will reduce the total annual amount due with the health insurance return.
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