15th April 2016

OECD Taxing Wages Report: Czech tax wedge stabilised


Taxes on labour income for the average worker across the OECD remained stable at 35.9% in 2015, ending a series of steady annual increases dating to 2011, according to a new OECD report. 

The Czech Republic has the 8th highest tax wedge among the 34 OECD member countries in 2015. The country occupied the same position in 2014. The average single worker in the Czech Republic faced a tax wedge of 42.8% in 2015 compared with the OECD average of 35.9%.

In the Czech Republic, income tax and employer social security contributions combine to account for 81% of the total tax
wedge, compared with 77% of the total OECD average tax wedge. View more data on the Czech Republic.


The average personal income tax as percentage of total labour costs increased in 23 countries (Australia, Austria, Canada, the Czech Republic, Denmark, France, Germany, Iceland, Israel, Italy, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Poland, Portugal, the Slovak Republic, Slovenia, Sweden, Switzerland, Turkey and the United States). The Netherlands is the only country with an increase of more than on percentage points; i.e. 1.23.

The savings realised by a one earner married couple compared to a single worker were greater than 20% of labour costs in Luxembourg, and greater than 15% of labour costs in four other countries – the Czech Republic, Germany, Ireland and Slovenia.

Employers in France pay 27.5% of total labour costs in social security contributions, the highest amongst OECD countries. The corresponding figures are also more than 20% in nine other countries - Austria, Belgium, the Czech Republic, Estonia, Hungary, Italy, the Slovak Republic, Spain and Sweden.

As a percentage of labour costs, the total of employee and employer social security contributions exceeds 20% in more than half of the OECD countries. It also represents one-third of total labour costs or more in eight OECD countries: Austria, Belgium, the Czech Republic, France, Germany, Hungary, the Slovak Republic and Slovenia.

In all OECD countries except Mexico and Chile, the tax wedge for workers with children is lower than that for single workers without children.  The differences are particularly large in the Czech Republic, Germany, Ireland, Luxembourg and Slovenia.

The fiscal preference for families compared with singles increased in 8 OECD countries: Australia, Canada, the Czech Republic, Estonia, France, Greece, Israel and Poland. Additionally, the effects of changes in the tax system on the tax wedge were independent of the family type in Mexico.

Read the report here (in English)


Also, read an article by the Czech Radio Plus  (ČRo Plus) on reasons behind the (wide) gender pay gap in the Czech Republic (in Czech).

Members of the American Chamber of Commerce in the Czech Republic