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Global Payroll Team
Written by Global Payroll Team
Last updated May 7, 2026
Expert Reviewed
Payroll in Czech Republic
Tax in Czech Republic
Immigration in Czech Republic

Czech Republic map

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Mercans offers complete payroll, PEO and HR services in The Czech Republic

Having joined the European Union in 2004, the Czech Republic remains a highly developed export-oriented economy with strong industrial, engineering and automotive capabilities, as well as a growing technology and services base. The country continues to offer a skilled workforce, solid infrastructure and a central European location attractive to international investors and employers.

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Doing Business in The Czech Republic

The process of opening a company can still be more cumbersome than in some other OECD countries, but the Czech Republic remains an established manufacturing and investment location. CzechInvest continues to play a key role in supporting business expansion, investment and innovation activity.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in the Czech Republic is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: Monday – Friday from 8.00 am-5.00 pm

Working Week

The standard working week is generally 40 hours, usually worked from Monday to Friday.

Labor Law

The Labour Code remains the key source of employment law. Employers should also account for current rules on annual leave calculation, remote work, transfer of undertakings, posting of workers and mandatory employment documentation.

Main Industries

Automotive, high-tech engineering, electronics, machinery, metalworking, chemicals, business services and information technology

GDP Growth

2.7%

Dates & Numbers

dd/mm/yyyy

Official State Name

Czechia

Population

10.92 million

Capital

Prague

Major Languages

Czech

Currency

Czech Koruna (CZK)

Internet Domain

.cz

International Dialing Code

+420

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Czech Republic
Prague, CZ
3:32 pm, May 18, 2026
19°C
clear sky
35 %
Wind Gust: 0 mph
Clouds: 0%
Sunrise: 5:12 am
Sunset: 8:45 pm

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Payroll

Employment contracts typically include the type of work, place of work and date work commences, together with agreed remuneration and other working conditions. Companies operating multi-country payroll should note that some employment terms may also be specified in internal regulations where permitted by law.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 30 years

Reports

Four weeks

Annual Leave

During the first 14 calendar days of temporary incapacity for work, wage compensation is generally paid by the employer, typically at 60% of the reduced average earnings

Sick Leave

28 weeks of paid maternity leave and 2 weeks of paid paternity leave

Maternity & Paternity Leave

On provision of two months notice

Employee Termination

Although there is no legal requirement to pay a 13th month salary, a performance-based bonus can be paid

13th month salary

22,400 CZK per month

Minimum Wage

At least 25% of average earnings, unless compensatory time off is agreed

Overtime

Severance is generally based on length of service, with at least one average monthly earning in qualifying cases

Severance Pay

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Tax and Social Security

Czech tax residents are generally subject to Czech income tax on their worldwide income. Tax non-residents are generally taxed only on income considered derived within the Czech Republic. Social security and public health insurance contributions apply to employees and employers under the Czech system.

Tax

The Czech Republic applies corporate income tax, personal income tax and VAT under a mature European tax framework. Personal income tax is progressive, while the standard VAT rate remains 21%.

21%

Corporate Income Tax

23%

Personal Income Tax

21%

Sales Tax

21%

VAT

Social Security

The Czech social security system provides benefits such as sickness, maternity, pension and unemployment support, while public health insurance applies separately. Employers and employees both contribute through payroll.

45.4%

Social Security Rate

33.8%

Social Security Rate for Employers

11.6%

Social Security Rate for Employees

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Employment Law

Generally, it is the Labour Code which applies and covers employment relations between employer and employee. Employee protection provided by the Code is based on domestic law and international standards.

Employment agreement

A contract of employment must include certain prerequisites such as the type of work to be performed, the place of work and the start date. Employment contracts are generally required to be in writing.

Working conditions

Regulations concerning overtime cover employees in an employment relationship and are contained in the Labour Code. Overtime work must generally be performed outside established shifts and within statutory limits.

Leaves

The employer decides the period when an employee takes annual leave, but is required to enable the employee to take the full statutory leave to which they are entitled within the relevant calendar year. There are also other leave entitlements under the Labour Code.

Employment termination

Termination of employment is accomplished by agreement, notice of dismissal, immediate cancellation or cancellation during the probation period. Statutory notice periods and severance rules apply in qualifying cases.

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2 months

Minimum notice period for terminating an employee

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13

Total number of public holidays

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40

Working hours per week

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3 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

There are a number of visa and residence categories which allow foreigners to enter and temporarily stay in the country. Short-term Schengen visas may allow stays up to 90 days, while long-term visas and residence permits are used for employment, study, family reunification and other longer-term purposes.

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Residency permits

A long-term residence permit allows the holder to stay in the Czech Republic for purposes such as employment, investment, family unification, study or scientific research. For employment, the Employee Card remains one of the main residence routes for third-country nationals.

Work Permit validity

Up to 2 years

Required Documents

A completed application form

A passport that is valid for the required period

Passport-sized photos

Documents outlining the nature of the applicant’s stay, such as employment documents or an Employee Card basis

Proof of travel medical insurance where applicable

Proof of accommodation for the duration of the stay

A criminal record from the country of residence where required

Proof of financial security

Proof of payment of the application fees

Compliant, reliable, error-free and touchless payroll in Czech Republic

Build the best team and hire top talent compliantly in Czech Republic. Get in touch with Czech Republic payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in the Czech Republic and how does it work for foreign companies?

    An Employer of Record (EOR) in the Czech Republic allows foreign companies to hire employees legally without setting up a local entity. The EOR manages employment contracts, payroll, taxes, and compliance with Czech labor laws.

    Why should businesses choose an EOR instead of setting up a legal entity in the Czech Republic?

    Using an EOR saves time and setup costs, ensures compliance, and enables quick market entry – ideal for companies testing the market or hiring a small team.

    How does payroll outsourcing in the Czech Republic ensure compliance with tax and labor regulations?

    Payroll outsourcing ensures accurate salary processing, tax payments, and social contributions in full accordance with Czech laws, minimizing compliance risks.

    Can an Employer of Record in the Czech Republic hire employees and manage work permits for international companies?

    Yes, an EOR can legally hire employees and handle work permits, managing all HR and payroll processes for foreign companies.

    What are the main benefits of using EOR and payroll services in the Czech Republic for global expansion?

    EOR and payroll services enable fast hiring, full compliance, reduced risk, and local expertise—helping businesses expand into the Czech Republic efficiently.

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