From 1 January 2019, an amendment of acts intended for performing pension and health insurance is taking effect, which brings significant changes in the self-employed persons’ agenda. The most important changes will relate especially to the regime of advance payments of social insurance premium, the date, when they are due, or the minimum sickness insurance premium on grounds of performing a self-employed activity. In the article, we bring you an overview of the most important changes and we recommend to all self-employed persons to familiarise themselves with the new rules in time.

1. New due dates for insurance premium payment

From January 2019, advance payments of pension and health insurance premium will already be paid in the month, to which performance of self-employed activity relates. Instead of the original due date for advance payments of the premium, which was from the 1th to the 20th day of the subsequent month, the new due date will be from the first to the last day of the calendar month, for which the insurance premium is paid. The form of payment does not change, it is still necessary to state the assigned variable symbol identifier when paying insurance and to remit the payment to the specified bank connection of the Social Security Administration (OSSZ).

The change in advance payments of insurance premium has occurred mainly due to the option of accelerated issuing of annual overviews of prescription and payments on the part of OSSZ, which had to wait until the due date of the last advance payment, that is until 20 January of the following year, to issue an overview of advance payments.

Here it is added that no change occurs in connection with advance payments of health insurance premium. These are still due by the 8th day of the following calendar month.

2. Pension insurance

2.1. Advance payments at the turn of the year

For the purpose of eliminating duplicate payments of insurance premium, a transitional provision stipulates, in what way payments made at the turn of the year will be approached. According to the transitional provisions, self-employed persons are not obliged to make the advance payment for December. The payment need not be made until the calculation of underpayment of insurance premium during the settlement of the Survey of income and expenses of self-employed persons for the year 2018. If it is in the interest of the self-employed person to pay the advance payment for December now already, it can do so in the period from 21 to 31 December 2018, that is after the period, when advance payment for November 2018 is due. Any advance payment paid in January 2019 will be considered an advance payment for this month, despite the advance payment for December not having been paid at all.

2.2. Commencing activity

The change also applies to self-employed persons commencing their activity. The amendment prolongs the period, in which advance payments of insurance premium are due for the month, in which the self-employed person commenced its self-employment. The self-employed person is obliged to pay the advance payment of insurance premium for the first month until the end of the following month. A self-employed person, who begins its activity in December, is not obliged to pay the advance payment for December. Insurance premium is only paid together with submitting the annual Survey of income and expenses of self-employed persons.

2.3. Minimum monthly advance payments and minimum monthly base of assessment

The new minimum monthly base of assessment for pension insurance for self-employed persons performing primary activity reaches CZK 8,175 for the year 2019.

This base of assessment will only apply from January 2019 for self-employed persons, which will begin their self-employment in the year 2019. If a self-employed person is paying advance payments of insurance premium in the year 2018 in minimal height, it may continue to pay in this way until the month, when it submits or should have submitted the Survey of income and expenses for the year 2018.

• The minimum monthly advance payment of pension insurance premium for the year 2019 for self-employed persons performing primary self-employment activity reaches CZK 2,388;
• The minimum monthly advance payment of pension insurance premium for the year 2019 for self-employed persons performing secondary self-employment activity reaches CZK 955.

The minimum advance payments are paid by self-employed person in the course of the first year and also by a self-employed person, which posted lower base of assessment in the Survey of income and expenses than is the set minimum base of assessment.

2.4. Change in the sum of advance payments after submitting the survey

The amendment also changes the validity of the period of the monthly base of assessment and the set advance payments in connection with the submitted survey. Advance payments of insurance premium for the year 2019, the sum of which follows from the Survey of income and expenses of self-employed persons for the year 2018, will be only paid in the new sum starting from the month following after the month, in which the Survey of self-employed persons was or should have been submitted. The new sum of advance payment can already be paid in the month of submitting the survey, in case the new advance payment is lower than in the previous period.

2.5. Cancellation or lowering of advance payments for person with secondary self-employment

A self-employed person performing secondary self-employment gains at the same time an option to request a lowering of advance payments from the Social Security Administration (OSSZ), or cancellation of the obligation to make advance insurance payments, if its income after deduction of expenses in the assessed period of the given year (3 calendar months at minimum), in which it submitted a request, newly does not, or will not establish participation in pension insurance.

2.6. Cancellation of the limit on maximum advance payment

The sums, which exceed prescribed advance insurance payments, will automatically be considered an overpayment. This overpayment will be used for payment of due obligations and then for advance payments in the future, but only until December of the given year at the latest. But careful, though, if you pay advance insurance for the entire year ahead, but based on the annual Survey of self-employed persons, an obligation to pay higher advance payments arises for you. The original overpayment from the beginning of the year will remain ascribed to previous advance payments and it is thus necessary to pay the sum of the difference above the originally determined advance payments after submitting the Survey of self-employed persons already, so that no penalty is prescribed for you subsequently.

Penalty on advance insurance payment

An unpaid advance insurance payment for a current calendar month, which the self-employed person pays additionally by the end of the following calendar month, will not be subject to penalty any more. But if the self-employed person does not pay it in this prolonged deadline either, the penalty of the advance payment will be calculated from the first day following the due date of the advance payment.

3. Sickness insurance

3.1. Minimum monthly advance payments and minimum monthly base of assessment

The minimum base of assessment for sickness insurance increases due to the increase in average wages and is set at CZK 6,000 in the year 2019. The minimum monthly payment of insurance premium thus increases from the original CZK 115 (advance payments are paid until the end of the year 2018 in this sum) to CZK 138.

3.2. Payment of insurance at the turn of the year

In order for sickness insurance of a self-employed person not to be terminated at the turn of the year, it is necessary for the person to pay sickness insurance for December reaching the original sum of CZK 115 by 21 January 2019 and at the same time to make one more payment reaching a minimum of CZK 138 (the newly set minimum sum for the year 2019) by the end of January. In case insurance for January 2019 is not paid by 28 February 2019 at the latest, sickness insurance will be terminated.

3.3. Termination of insurance

The strictness of the current regime will newly be removed and more lenient rules are being set for termination of sickness insurance. In case a self-employed person does not pay at least minimum sickness insurance premium within the regular deadline, but pays it additionally by the end of the month following after the month, in which it was to have been regularly paid, participation in sickness insurance is not terminated. This change will apply to the due date of insurance premium for January 2019 already.

It is important to keep in mind and not forget that some of the changes already relate to advance payments of insurance premium for December. We therefore recommend that you set up payments for paying your insurance suitably in advance. You can thus prevent misunderstandings with the social security administration as well as possible termination of participation in sickness insurance.