At first glance, the agreement itself looks simple – a few hours of work, a simple contract and a quick payday. But this is also where the tax system comes into play, and it’s changing again in 2025. When is tax due on earnings from a DPP? What role does the CZK 11,500 per month threshold play? And when is it worth filing a tax return even if you don’t have to?
What does DPP mean? It is an abbreviation for a work performance agreement. It is one of the two main agreements that can be made with an employer (outside the employment relationship). It’s a simple contract that an employer can arrange with you when they need help with some short-term work. For example, a part-time job, to help out for a few days or weeks.
We have discussed in detailthe work performance agreement, its conditions, levies, holiday rules and all other relevant information in our article.
The key factor in determining the DPP levy is the amount of the monthly remuneration. This amount has a major impact not only on the premium but also on the taxation of the DPP as such. This is because the amount of earnings determines whether you are entitled to an annual tax settlement on the FTC or whether you are obliged to file a tax return for the work arrangement.
The threshold for triggering compulsory insurance is now set at 25% of average wages, rounded down by CZK 500. This threshold is set at CZK 11 500 per month in 2025.
We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
If you have a monthly income of less than CZK 11,500 from a work agreement with one employer, you do not qualify for pension and sickness insurance. In this case:
As soon as the employee’s monthly income from the FTC reaches or exceeds CZK 11,500 (including the sum of several FTCs with one employer), the employee is obliged to participate in sickness and pension insurance and is also obliged to pay the insurance premium. In this case:
For insurance purposes, the income from all FTCs with the same employer is added together. Thus, if an employee has, for example, two agreements with the same employer (e.g. one for CZK 11,000 and one for CZK 500), the income is added together and participation in the insurance arises.
On the other hand, income from FTCs with different employers is not aggregated. In this case, participation in insurance is assessed separately for each employer. Similarly, income from a FTE is not aggregated with income from an employment contract or a work arrangement, even with the same employer.
What are the employer’s obligations in the case of FTEs and FTEs? Our article will answer this question.
A 15% personal income tax is normally withheld from the income from a DPP. How and how much tax is actually applied depends on whether you have reached the income threshold of CZK 11,500 and whether you have signed a tax declaration.
If you want to calculate your FIT tax, we recommend using one of the online FIT tax calculators, which will show you the difference between withholding tax and advance tax.
Any employee, whether student, pensioner or entrepreneur, can sign the Pink Declaration, the official taxpayer’s declaration for personal income tax from employment.
You can only sign the declaration for one employer in the same month. If you have more than one job at the same time (for example, two DPPs or one DPP and one main job), you must choose only one employer to sign the declaration with. Most often the one with the highest income is chosen.
If you sign a pink declaration with more than one employer at the same time, the tax credits will be incorrectly applied. This will result in an underpayment of tax that you will have to pay back – and you could face penalties from the tax office. In addition, the employer is obliged to report this and deduct the difference in tax from the employee’s wages.
Wondering how to fill in the income tax declaration (pink declaration)? We have prepared detailed instructions for you in the following article.
Example: Anna earns 10 000 CZK on a part-time job and has not signed the pink declaration.
Result: her employer withholds 15% withholding tax (CZK 1 500) and sends the rest (CZK 8 500) to her account. The tax is no longer an issue unless she files a tax return.
Example: Klara earns CZK 14,000 and has a signed declaration.
Result: 15% tax would be CZK 2 100, but the taxpayer rebate will cover it. So Clara will get the full CZK 14 000 and the tax will not be deducted.
Example: Tomáš has two FTEs with one employer: one for CZK 9,000 and one for CZK 3,000 per month. In total, he earns CZK 12 000. He has signed a tax declaration.
Result. The total income of CZK 12 000 is subject to advance tax.
Example. She earns CZK 6 000 at the first and CZK 7 000 at the second. So the total is CZK 13 000, but for each of them she stays under the limit of CZK 11 500. She has signed a tax declaration only for the first one.
Result. For the second employer: without the declaration, 15% withholding tax will be deducted from CZK 7,000, i.e. CZK 1,050 – Petra will receive CZK 5,950. In total, she will receive CZK 11 950.
You don’t usually have to file a tax return if you work under a performance contract, but in many cases it is worth filing voluntarily, as this can allow you to get some or all of the tax back.
One of the most common cases where it pays to file a tax return is if you do not have a signed tax declaration (pink paper) and you earn up to CZK 11,500 per month. In this case, your employer automatically deducts a 15% withholding tax, which you do not have to deal with any further. However, if you include this income in your tax return, you can get some or all of the tax back thanks to the basic tax credit .
The tax return is also worthwhile if you have more than one DPP at the same time and you only have to sign a tax declaration with one employer. For other DPPs, your employers will tax your income without any rebates. If you request a taxable income certificate from them and enclose it with your tax return, you can claim tax credits retrospectively and get some of the tax back again.
Another situation where a tax return is worthwhile is if you only worked for a short time or had a low income in the year. Typical examples include students, parents returning from maternity leave, pensioners on extra pay, or people who stopped working during the year. In these cases, you may not have used the full taxpayer’s allowance and your tax return will allow you to claim the full allowance and get a refund of the overpayment.
How do tax overpayments arise and when am I entitled to a refund? Find out in the next article.
The annual tax settlement is a way for an employee to sort out their taxes easily through their employer without having to file a tax return themselves. At the end of the year, your employer will take stock of your entire annual income, take into account any tax rebates and, if you have paid more in tax than you should have during the year, refund you the overpayment.
You must ask your employer for an annual tax statement by 15 February of the following year and attach the necessary documents. However, as an agreement worker, you are not always entitled to use this option. There are several conditions that must be met:
As the text shows, the work arrangement and taxes are closely related. Whether you pay tax on a DPP depends on the amount of income and the declaration you sign. In addition, the thresholds for DPP levies are changing in 2025. So keep an eye on the latest information, especially if you plan to take out a DPP with more than one employer at the same time. And don’t forget – a work arrangement tax return could be the key to your refund.
A work performance agreement (WPA) is a contract suitable for short-term and casual work, with a limit of 300 hours per year with one employer. In 2025, the key threshold is £11,500 per month – up to this amount, no social security or health insurance is payable and only 15% tax is payable. Higher income triggers the obligation to pay insurance and the tax is calculated as an advance payment.
Whether the tax is actually deducted and in what amount depends on whether the employee has signed a tax declaration (the so-called “pink paper”). With it, the tax can be waived thanks to the taxpayer discount. Without it, the 15% tax is deducted automatically. Income from multiple DPPs with the same employer is added together, but not with different employers.
A tax return is not usually filed but may be worthwhile – for example, if a tax declaration has not been signed or if income is low. An alternative is an annual tax return, which can be requested from the employer if the employee has only received income from the employer and has met other conditions.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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