The Recovery Package in the context of tax changes
Following the Government announcement on the Recovery Package, the related amendment to the tax regulations was published. Below we summarise a selection of the most important changes in this area.
As from 1 May 2022, the minimum amount of gross monthly or annual salary paid to holders of Blue Cards, a type of residence permit for highly qualified foreign nationals, has increased. Until 30 April 2023, this amount will have to be at least CZK 56,758.50 per month (or CZK 681,102 per year). However, it is possible that this threshold will be lowered next year at the latest. In the following article you will find out why this is the case.
Conditions for Issuing the Blue Card in the Czech Republic and Current Situation in the EU
The Blue Card is a type of long-term residence permit issued to third-country nationals whose purpose of stay in the Czech Republic is to perform highly qualified employment requiring a duly completed, at least 3 year-long university degree or higher vocational education. Another condition that an applicant for a Blue Card must fulfil is the submission of a work contract for a period of at least one year and for the weekly working hours stipulated by law. The employment contract must also contain the amount of agreed gross monthly or annual salary, which must be at least 1.5 times the average gross annual salary stated by the Czech Ministry of Labour and Social Affairs. For the period from 1 May 2022 to 30 April 2023, the average gross annual salary in the Czech Republic will be CZK 681,102, so the amount of the foreign national’s gross monthly salary during this period must be at least CZK 56,758.50.
The relatively high requirements for Blue Card applicants are one of the reasons why there is a significantly lower number of these residence permits issued than those of alternative residence titles. While over 104,000 employee card holders were reported to the Labour Offices of the Czech Republic as of 31 January 2022, the number of Blue Card holders was 1,357 as of the same date. This number is still above average at the European level ‒ while the Czech Republic issued 366 new Blue Cards the previous year, similarly-sized countries such as Hungary and Portugal registered only individual cases of Blue Cards issued in the same year, with similarly low numbers reported also prior the COVID-19 pandemic. Germany is an exception within the EU with almost 100,000 first Blue Cards issued to foreign nationals between 2016 and 2020, accounting for roughly three quarters of all Blue Cards in the EU.
We have summarised all the important information about the Blue Card in an article called Blue card for foreigners: how to get it and what benefits does it bring.
New Directive and Plan to Attract Highly Skilled Workers
As part of making the Blue Card system more attractive, the Council of the EU adopted a revision of the Blue Card Directive last October, which aims to attract and retain highly skilled workers in the EU, particularly in sectors facing highly skilled personnel shortages. Under the new Directive, a six-month instead of a one-year contract is sufficient to issue the first Blue Card. It will also halve the extent of the obligation for Blue Card holders to apply for consent to change employers: from two years to one year. The EU Member States will also be able to adjust the minimum salary required for the issue of a Blue Card to at least 1.0 times but not more than 1.6 times the average gross annual salary in the Member State concerned. There will be a significant change for specific positions in the ICT sector, where higher professional skills should be considered equivalent to a university qualification for the purpose of applying for a Blue Card. The length of professional experience required in this case should be three years, corresponding to the length of a university degree. The new Directive also introduces the status of a recognised employer, under which the issue of Blue Cards to employees of certain companies should be facilitated.
New Rules Next Year at the Latest
The adopted version of the Directive entered into force on the twentieth day following its publication in the Official Journal, i.e. on 15 November 2021. EU Member States issuing blue cards must bring into force the laws necessary to comply with the Directive by 18 November 2023.
Summary of expected developments:
- From 1 May 2022, the minimum monthly salary for Blue Card holders must be at least CZK 56,758.50.
- In October 2021, the Council approved a new Blue Card Directive, which loosens the conditions for issuing this type of residence permit.
- Member States should adapt their legislation to the new rules by 18 November 2023.
During the COVID-19 pandemic, the Blue Card was the only type of permit that could be applied for at most Czech embassies without having to enrol the employer in a government program. This situation also demonstrated that Blue Card holders may have a competitive advantage over holders of other types of residence permits. At the same time, it can be expected that the demand for Blue Cards will increase soon. If you would like to obtain Blue Cards for your existing or new employees now, please do not hesitate to contact us ‒ we will be happy to guide you through the entire immigration process and answer any questions you may have.
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