Czech Republic Agreement and foreign pension information 106-04012000

In the Czech Republic, pension insurance legislation requires the compulsory payment of contributions on behalf of employees, usually through deductions from paid employment. Insurance also applies to the self-employed.

Contributions insure individuals against disability and death and provides for income in the form of a pension once the person reaches retirement age.

Sickness and unemployment are covered by further legislation an there is a non-contributory scheme covering social payments for those with low income.

The legislation is the responsibility of the Czech government but administration and payment of pensions under is the responsibility of a centralised government administration.

The Agreement with Czech Republic started on 1 July 2011. There are no previous versions.

For Australia:

Department of Social Services (DSS)

For Czech Republic:

Ministry of Labour and Social Affairs- Ministerstvo Práce a Sociálních Věcí (MPSV)

For Australia:

Australian Government Agency, Services Australia

For Czech Republic:

Czech Social Security Administration - Česká Správa Sociálního Zabezpečení (ČSSZ)

For Australia:

International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for anything relating to double coverage. See Double coverage/certificates of coverage

For Czech Republic:

See Competent Institutions

Under the Agreement with the Czech Republic, information held about customers may be exchanged between the Liaison Agencies to determine entitlement to payments under the Agreement and under either country's domestic legislation (Article 19.1).

For more information on bulk data exchange, see International Data Exchange Program and auto-indexation of foreign pensions.

These forms are completed by the Czech Republic or the customer and are returned to International Services (CIS).

TRANSMITTAL/REQUEST/ERTIFICATION FORM - FORMULÁŘ PRO KOMUNIKACI/DOŽÁDÁNÍ/POTVRZENÍ (CZ/AU 001)

• Section 1 - INFORMACE O ŽÁDOSTI/INFORMATION ABOUT THE CLAIM: this section provides details of the applicant and insured person
• Section 2 - POTVRZENÍ ÚDAJŮ / CERTIFICATION OF DATA: this section confirms personal details ad verification
• Section 3 - POSKYTNUTÉ INFORMACE/INFORMATION PROVIDED
• Section 4 - POTŘEBNÉ INFORMACE/INFORMATION NEEDED
• Section 5 - POZNÁMKY/REMARKS

INSURANCE PERIODS CERTIFICATE - POTVRZENÍ O DOBĚ POJIŠTĚNÍ (CZ/AU 205)

Provides details of creditable periods in the Czech Republic.

Australian claims under the Czech Agreement may be lodged in some other Australian social security agreement countries.

Czech Republic will not accept claims for Australian benefits under other Australian social security agreements.

See Claim Lodgement Matrix (CLM).

For Australia, the Agreement only covers Age Pension so medical information is not required.

However, the Agreement covers Czech Disability Pensions and the Administrative Arrangements include provisions for existing Australian information to be provided to Czech Republic on request.

Medical examinations may also be undertaken upon request. Reimbursement of costs applies, including reasonable travel and accommodation.

Forms

Should an examination be required, the E213 variant may be used. See Foreign pension medical assessments.

Any enquiries about double coverage or certificates of coverage should be directed to the Australian Taxation Office (ATO) website.

The Agreement with Czech Republic includes double coverage provisions. Certificates of coverage are used to confirm exemptions.

See double coverage/certificates of coverage information in International Social Security Agreements.

Any queries about taxation of pensions or the requirement to lodge a tax return should be directed to:

• In the other country - the tax/health authority in that country directly
• In Australia - the Australian Taxation Office (ATO) website

For general information on taxation, including issuing Australian Payment Summaries, see the Taxation information in International Social Security Agreements.

Tax treaty

Australia has a double tax agreement with Czech Republic. Pensions are only taxable in the country in which the person is resident. Tax deductions from pensions by one country are allowed as a credit against tax payable for residents of the other country.

Tax deductions

Czech pensions are not taxed at source.

Czech tax year

Czech Republic uses the calendar year (1 Jan - 31 Dec) as the tax year.

Any queries about:

• Health insurance coverage in the other country - the customer should be directed to contact the health insurance authority in the other country
• Medicare coverage - should be directed to Medicare, see Medicare phone numbers

For general information on health insurance and Medicare coverage, see Health Insurance/Medicare information in in International Social Security Agreements Australia does not have a reciprocal health agreement with Czech Republic.

Czechoslovakia dissolved into the Czech Republic and Slovak Republic on 1 January 1993.

Entitlement to a pension is based on in which country the person's last employer was registered. Where necessary, claims sent to the Czech Republic will be sent to the Slovak Republic authorities.

For Australia, the Agreement with Czech Republic (Article 2.1) covers:

• Age Pension

Note: Additional child amounts, also known as Overseas Child Component and Additional Child Payment, are included in the proportional rate calculation.

Claims for Australian payments under agreements use the same methods and processes as domestic claims. See Claims for Australian payments under International Agreements.

Forms to claim an Australian payment in Czech Republic can be obtained by:

• Contacting the Czech authorities or International Services (CIS)
• Downloading the relevant form from the Services Australia website. See the Resources page for a link

Forms required:

For all payments:

• AUS140CZ - Australian pension claim - Agreement with Czech Republic
• Mod(iA)CZ - Income and Assets - Czech Republic

Forms can be lodged at any Czech Social Security office.

Under the Administrative Arrangements, the Czech institutions will receive and date stamp the form and verify identity and personal details.

The Czech Liaison Agency will send the claim and Liaison Form to Services Australia, including periods of coverage in Czech Republic and Czech pension details. See the Exchange of Information and liaison forms on the General information tab for the Czech liaison form.

If a person is not an Australian resident and in Australia on the date the claim is made, they may use the Agreement to meet the residence rules for claims if, on that date, they are:

• an Australian resident, a resident of the Czech Republic or another Agreement country that accepts claims for Australian pension under another agreement ((Article 10(a)), and
• physically present in Australia, the Czech Republic or that third country (Article 10(b))

The normal rules for working out the date a claim is 'made' and the start day apply to claims under the Agreement with Czech Republic. However, the Agreement also allows:

• the date of lodgement of a claim for an Australian payment in Czech Republic to be used as the date of lodgement in Australia (Article 16.2), or
• the date of lodgement of a claim for Czech Old Age Pension as the date of lodgement of Australian Age Pension provided that the customer declared an affiliation with the Australian legislation and the claim for Australian pension is received within 12 months of the lodgement of the Czech claim (Article 16.3)

See Claims for Australian payments under International Agreements) and Start Day (CLK) for coding assistance.

The Agreement allows:

• totalisation of periods of qualifying Australian residence and creditable periods in Czech Republic to meet any minimum periods to qualify for an Australian pension , for example, 10 years for Age Pension (Article 11.1)
• the total of any non-continuous periods of insurance in Czech Republic to be considered to be continuous to meet any continuous residence requirements (Article 11.2)

Notes:

• overlapping periods are only counted once (Article 11.3)
• policy advice is that adjoining periods of Australian qualifying residence and creditable periods in Czech Republic, with a break of up to 3 months in between, can also be considered to be continuous

To be able to use the totalisation provisions, a person who is not an Australian resident at the date of lodgement must have at least 12 months Australian Working Life Residence (WLR) in Australia of which 6 months must be continuous (Article 11.4(a)). Note: unlike WLR for rate, this period cannot be rounded.

No minimum WLR is required if the person is an Australian resident at the date of lodgement (Article 11.4(b)).

The Agreement with the Czech Republic (Article 12.1) refers to the overall rate calculation contained in the Social Security (International Agreements) Act 1999 (S12(1)).

This means:

• customers paid under the Agreement who are outside Australia are paid a proportional rate according to their Australian Working Life Residence (WLR)
• the Rate Limiter/Limited Rate applies, and
• additional child amounts are included in the proportional rate. These amounts are paid automatically as a component of the Australian pension if the customer is qualified (S14A SS(IA)A1999).

The Agreement with the Czech Republic does not include the proportionalisation of any Czech pension in the income test (Randisi concession).

Although a person may be qualified for an Australian payment or portable outside Australia, if the customer has no WLR the rate of payment outside Australia will be nil.

When a person is paid a proportional rate under an agreement, Rent Assistance (RA) cannot be paid. Other add-ons such as Energy Supplement and Pension Supplement are payable under normal add-ons portability rules. See Portability of Add-ons.

Examples of when a customer is paid a proportional rate includes (but not limited to):

• permanently overseas
• temporarily overseas longer than 26 weeks for age pension
• former resident transferring to the agreement for portability

Returns to Australia:

The proportional rate continues to apply for the first 26 weeks of a temporary return to Australia (Article 12.2).

If there is no change to the country of residence, any movement is considered temporary and a review is set to automatically change the rate after a continuous period of 26 weeks. If a delegate determines that a person has changed their country of residence, coding the information on the Country of Residence (CRES) screen will automatically apply the correct rate calculation.

For returns to Australia before 9 June 2018, manually code Temporary Return to Aust Ind on the Residence Savings (RSS) screen.

Customers in Australia under the agreement are paid a direct deduction rate (Article 12.3). That is, all Czech payments covered by the Agreement, including social welfare payments, are not assessed as income but will be deducted dollar-for-dollar from the maximum rate of the Australian payment before the application of the income or assets test.

The Agreement does not include a Comparison Rate in Australia.

Note: the rate paid from grant of a new claim is based on where the customer is present, even if resident in the other country and irrespective of the 26 week temporary departure provision.

For example, a person who is resident in Czech Republic lodges a claim while temporarily in Australia:

• If granted from a date when they were or are still in Australia, they will be paid the direct deduction rate from grant. The rate will swap to the proportional rate from the date they leave Australia
• If granted from a date when they were again outside Australia, for example, early claim, they will be paid the proportional rate immediately

Departures from Australia:

The inside Australia rate continues to be paid for the first 26 weeks of a temporary departure from Australia (Article 12.4).

Payments exempt under the Agreement are generally exempt for autonomous customers (section 8(8)(zc) Social Security Act 1991). See Assessment and exempt payments on the Czech Republic payments tab.

Under the Agreement, provided the customer remains qualified, Australian payments are payable indefinitely in Australia or the Czech Republic (Article 5.1).

Portability to third countries for a customer paid under the Agreement is the same as for an autonomous customer leaving Australia (Article 5.2). See Portability of payments.

If necessary, a customer in receipt of an autonomous payment covered by the Agreement may be able to transfer to the Agreement if they are in the Czech Republic when their normal portability period expires. The portability under the Agreement then applies, see Portability.

Once a customer transfers to the Agreement they are then considered to be paid by virtue of the Agreement and all provisions of the agreement apply, including rate of payment. See Rate Calculation.

Note: the customer must meet the transfer requirements. See Transfer to international social security agreements.

A person who would be autonomously qualified but is paid under the Agreement can only transfer from the Agreement to autonomous if they are an Australian resident and in Australia.

On return to Australia, system processing will automatically transfer to from the Agreement to autonomous if the person is an Australian resident who has only used the Agreement to extend their portability while outside Australia,

Customers who transfer to autonomous may be affected by the former resident provisions if they leave Australia again within 2 years of becoming an Australian resident. See Former resident provisions.

For Australian payments made into bank accounts outside Australia. See Overseas Bank Account Details (OBAD)

• Starobní důchody - Old Age Pension (AGE)
• Invalidní důchody - Disability Pension (INV)
• Pozůstalostní důchody - Survivors Pensions (SUR):
• Vdovský/Vdovecký - Widow/er
• Sirotčí - Orphans

Note: main payments consist of a percentage (procentní) and base rate (záklasní).

• Příplatek k duchodu - Pension supplement
• zvláštní příspěvek k důchodu podle zákona - Special contribution to pension

The requirement to claim applies to Czech AGE, INV and SUR.

Notes:

• The requirement to claim SUR only applies to Widow/er not Orphans. Customers may voluntarily claim Orphans pension using the SUR claim pack. See Claims, forms and processes
• The grant of SUR results in a recalculation of AGE/INV. When increase is granted and coded, update the Foreign Claim Details (FGD) screen for SUR to FIN-NOM

Contributions paid by employers and employees in Czech Republic. May include periods for child-rearing, studying and military service.

The Eligibility and coding tab contains detailed information on Czech payments that are subject to CFP legislation.

Claim packs containing all the necessary forms to claim a Czech payment can be issued through the Foreign Pension System (FPS).

Claim packs are available for : AGE/INV/SUR

Specific requirements for Czech claims:

The customer is to complete and provide the following:

All claims:

• CLAIM FOR A PENSION FROM THE CZECH REPUBLIC - ŽÁDOST O DŮCHOD Z ČESKÉ REPUBLIKY (CZ/AU 202)
• Birth certificate
• Evidence for substitute insurance periods (child-rearing, study, military service)
• Czech life certificate, see Life certificates

Note: income declaration is for the calendar year when claimed.

SUR only:

• Deceased's birth certificate
• Death certificate
• Marriage certificate

Requests for Additional Information

Where information provided with the claim for a Czech pension is incomplete, the Czech Republic will send requests for information in Czech direct to customers.

Return of foreign pension claim:

Under the Administrative Arrangements, the Czech Republic forms can be lodged in Australia at any service centre.

• All foreign pension claims and supporting documentation must be scanned, and
• The original foreign claim form and copies of supporting documentation must be sent in paper form via internal mail to International Services (CIS). See Processing a foreign pension claim

International Services (CIS) only

CIS will complete the following and attract to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

All claims:

Australia/Czech Republic Agreement on Social Security liaison form (AUS187CZ). For assistance with creating and completing the liaison form, see Agreement liaisons, NZ CICs and exchange of information.

INV only:

• E213 variant. See Foreign pension medical assessments
• copies of Australian medical information

Enquiries regarding claims for Czech payments in Czech Republic should be directed to the Czech social security authorities see the Authorities, Institutions and Liaison Agencies on the General information tab.

Payments can be made by cheque 4 times a year or by monthly direct deposit in arrears through the Czech National Bank.

Note: any queries about the non-payment of Czech pension should be directed to the Czech pension authorities, see the Authorities, Institutions and Liaison Agencies on the General information tab.

Customers receive 12 regular monthly payments Freq: 'MTH'. There are no bonus payments.

Note: small rates of pension may be paid less frequently, for example, every 6 months or annually. Amounts can also be coded as Freq: 'ANN'.

Payments into Australia are paid in AU dollars, however, all foreign pensions must be recorded in the source currency - Czech Koruna (CZK). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

Czech pensions are generally increased for cost of living (CPI) from 1 January each year.

Some foreign pensions recorded are automatically adjusted for CPI increases. See International Data Exchange Program and auto-indexation of foreign pensions.

Czech AGE, INV or SUR are:

• ordinary income outside Australia, and
• ordinary income in Australia for autonomous customers and direct deduction if paid under the Agreement (Article 12.3)

Notes:

• Widow/er pensions are usually paid for at least one year with continuation dependent on meeting certain criteria e.g. dependent children or disability. A review must be set to check and, if necessary, zero the amount at the end of the 12 month assessment period. In Customer First, create a manual review on the Review Registration (RVR) screen and complete the fields as follows:
• Service Reason: customer’s payment type
• Review Reason: OSR (Overseas)
• Due Date: 12 months from date of grant of Czech Survivor pension
• Source: INT
• Date of Receipt: today’s date
• Notes: ‘Czech Survivor pension granted xx/xx/xxxx. Zero payment on FPD.’
• Keywords: IATREV
• Workgroup: leave blank
• Position: leave blank
• Transfer to Region: leave blank
  The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action
• The pension supplement and special contribution – are considered part of the main payment. However, the special contribution may be exempt (see below)

Each member of a couple is deemed to receive half of the total amount received by the couple (Article 12.5).

Note: the 26 week rule applies for temporary departures from and returns to Australia (Article 12.2 and 12.4). See the Rate calculation on the Australian payments tab.

Amounts that are treated as a direct deduction under an agreement are exempt from the income test (s8(8)(zc) Social Security Act 1991).

Note: payments that are exempt from the income test are included in a direct deduction rate, for example, under an agreement rate calculation or for Special Benefit.

There are no exempt payments under the Agreement. However, the special contribution may be exempt when paid as restitution for National Socialist (Nazi) persecution. Staff should check if the supplement is paid under Czech law 357/2005.

The Eligibility and coding tab contains detailed information on the coding of Czech payments covered by the Agreement.

The Agreement does not include embargo provisions.

Arrears debts for customers and partners are raised under s1228A Social Security Act 1991 and recovered by normal methods. See Comparable Foreign Payment (CFP) lump sum arrears debts.

A contravention debt may also occur if the customer does not advise of the grant of their Czech payment within their notification period. See Foreign Pension coding.

Czech life certificates (Certificate of Living - POTVRZENÍ O ŽITÍ) are required when a customer claims for a Czech pension and while in receipt of a Czech pension

Customers can choose to provide their Czech life certificate:

• quarterly
• six-monthly
• annually

The Czech pension will be paid for the preceding period at the same frequency chosen by the customer. Customers who choose to provide a certified life certificate:

• every quarter - will receive their previous 3 Czech pension payments once every quarter
• six-monthly - will received their previous 6 Czech pension payments once every 6 months
• annually - will receive their previous 12 Czech pension payments once a year

Customers are to liaise with ČZZS if they want to change the frequency they receive their life certificate (and payments).

Czech Life Certificates can be certified by an officer of the Department.

For general information about helping customers with life certificates, see Assisting customers to maintain and existing foreign pension.

Customers in Australia are sent notices at grant and for changes of rate for example, indexation.

Payments into Australia are paid in AU dollars, however, all foreign pensions must be recorded in the source currency - Czech Koruna (CZK). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

For assistance with coding other benefits paid by the Czech Government, see Foreign Pension coding.

For assistance with any other income received from the Czech Republic, see Foreign income and assets.