Work Performance Agreement (WPA) and taxes in 2026

Are you dealing with a DPP, levies or tax return and not sure how to proceed? Take advantage of our tax legal advice.

Working on a DPP

What does a 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 of the employment relationship). It’s a simple contract that an employer can negotiate 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.

The main features of a performance agreement:

• Maximum of 300 hours per year: you can work a maximum of 300 hours per calendar year for one employer on a temporary employment contract.
• Required written form: The agreement must be in writing and include the definition of the work, remuneration and duration.
• Suitable for short-term and irregular work: most often used for temporary work, one-off tasks or occasional help.

Deductions from the DPP

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 required 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 12 000 per month in 2026.

Income up to CZK 11 999 per month

If you have a monthly income of less than CZK 12,000 from a work arrangement with one employer, you do not qualify for pension and sickness insurance. In this case:

• no social security or health insuranceis payable ,
• only income tax of 15% is payable.

Income of CZK 12,000 or more per month

Once an employee’s monthly income from a PPA reaches or exceeds CZK 12,000 (including the sum of several PPAs with the same employer), mandatory participation in sickness and pension insurance and the obligation to pay insurance contributions arise. In this case:

• social insurance: 7.1% of the gross wage is paid by the employee, 24 .8% by the employer;
• health insurance: 4,5 % is paid by the employee, 9 % by the employer;
• income tax is 15%, or 23% if the income exceeds CZK 146 901 per month (which is exceptional in the case of a DPP).

Important specifics – income aggregation

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 2,000), 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, the income from the FTE is not aggregated with the income from the employment relationship or the employment agreement, even for the same employer.

Do you have more than one agreement, do you combine a FTC with an employment relationship or are you unsure whether your employer has withheld tax and insurance premiums correctly? In the case of a DPP, the apparent details – the amount of monthly remuneration, the number of employers and the signed taxpayer’s declaration – make all the difference. With our tax legal advice, we can help you check the correct procedure and avoid underpayments or disputes with the authorities.

Tax and PPAs: How to calculate tax on a performance agreement

Personal income tax of 15% is normally deducted 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 12,000 and whether you have signed a tax declaration.

If you have not signed a tax declaration (pink paper)

• If you earn up to CZK 12,000 a month, your employer will automatically deduct 15% tax from your earnings in the form of a withholding tax. This tax is not dealt with any further, your employer pays it to the state and you have no further obligations.
• However, if you file your own tax return, you can claim back tax credits (e.g. the basic ratepayer discount) and get part of the tax back.
• If you earn more than CZK 12,000 a month, the tax is always calculated as an advance payment, not withheld. You can then offset it in your annual tax return or tax return.

If you have signed a tax declaration

• If you earn up to CZK 12,000 a month, you can often get no tax at all thanks to the taxpayer’s rebate (CZK 2,570 a month). You get the full amount “in hand”, without any deduction.
• If you earn more than CZK 12,000, the tax is deducted as an advance payment (15% of earnings), but you can get it back in your annual tax return or on your own tax return thanks to tax credits.

Who can sign the pink declaration?

Any employee, whether student, pensioner or entrepreneur, can sign the Pink Declaration, the official taxpayer’s declaration for personal income tax from employment.

You may 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 the 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.

Practical examples

I don’t have a signed tax declaration, I earn up to CZK 12,000

Example: Anna earns CZK 10 000 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.

I have a signed tax declaration, I earn more than 12,000 CZK

Example: Klara earns CZK 14,000 and has a signed declaration.

Result. The employee will pay social insurance of 7.1% of CZK 14 000, i.e. CZK 994, and health insurance of 4.5%, i.e. CZK 630. The 15% tax would be CZK 2 100 but will be covered by the taxpayer’s rebate. Clara will therefore receive approximately CZK 12 376.

The worker has multiple PPAs with the same employer

Example: Tomáš has two FTCs with one employer: one for CZK 9 000 and one for CZK 3 000 per month. He earns a total of CZK 12 000. He has signed a tax declaration.

Result. The total income of CZK 12 000 already reaches the qualifying amount for participation in the insurance scheme, therefore social security and health insurance are paid. The employee pays social insurance of CZK 852 and health insurance of CZK 540. The 15% tax is CZK 1 800, but this is covered by the taxpayer’s rebate. Thomas will therefore receive approximately CZK 10 608.

The worker has multiple PPAs with different employers

Example. She earns CZK 6 000 at the first and CZK 7 000 at the second. The total is therefore CZK 13 000, but for each of them she remains below the limit of CZK 12 000. She only signed the tax declaration 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.

An example from our law practice

We were contacted by a client who had several DPPs during the year – two with one employer and one with another company. He thought that as each agreement separately did not exceed the levy limit, there was no need to deal with the insurance premiums. The problem was that the two agreements with the same employer added up for insurance purposes and exceeded the £12,000 limit in a few months. The employer subsequently dealt with the top-up insurance premium and the client was concerned that he would also have to pay the tax.

We reviewed the individual monthly remuneration, the employers’ receipts and the taxpayer’s signed declarations. We explained where the client was liable to pay the premium, which income did not add up and when it made sense for him to file a tax return. As a result, we were able to correctly distinguish the premium error from the tax situation, and the client was given a clear process for what to document to the employer and what to include on the return.

DPP and tax returns: when to file and when is it worthwhile?

A tax return is usually not required for work under a performance work agreement (PWA), but in many cases it is worth filing voluntarily as this can allow you to reclaim some or all of the tax withheld.

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 12,000 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.

FIT and annual tax settlement

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:

• you must have a signed tax declaration (pink paper) from your employer,
• you did not have another employer at the same time from whom you had advance tax withheld (i.e. income from other DPPs up to CZK 12,000 per month withholding tax does not matter),
• you did not run a business or have other types of taxable income (e.g. from rent).

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 change regularly. So keep an eye on the latest information, especially if you are planning to take out a DPP with more than one employer at the same time. And don’t forget – your tax return could be the key to your refund.

Summary

A Work Performer Agreement is a popular form of short-term work, temporary work and earnings. But it’s essential for tax and levy purposes to keep track of your monthly pay with a particular employer. If the income from a DPP does not exceed CZK 11,999 per month, no social security or health insurance is payable on it. Once the income reaches CZK 12,000, insurance is payable and insurance premiums are deducted from the remuneration.

It is also important to distinguish whether you have a signed taxpayer’s declaration. Without one, a 15% withholding tax is typically applied to lower incomes. With a signed taxpayer declaration, you can take advantage of the basic taxpayer rebate, so the tax is often not deducted at all. However, you are only allowed to have a signed declaration from one employer in the same month.

Be especially careful of multiple concurrent agreements. PPAs with one employer are added together for insurance purposes, whereas PPAs with different employers are treated separately. If you only worked part of the year, had low income or had tax deducted without claiming any credits, it may be worth filing a tax return and claiming back any overpayment.