Once a year you are obliged to fill in and file your tax return. The deadline for filing the last year income tax return (but also for paying the tax) is at the end of March. In the case of processing and filing the tax return through an advisor, the deadline is postponed to July 1st, but in this case, please do not forget to submit the power of attorney granted to the advisor to the Tax Authority by March 1st.
Every month your employer deducts health insurance (4.5%) and social security contribution (6.5%) from your gross salary. Your employer also pays health insurance (9%) and social security contribution (25%) as an extra payment to the Government. Gross salary and these levies together make up the so-called super-gross salary (134% of gross salary), from which income tax is calculated. Income tax is 15%, calculated from the super-gross salary.
Your employer also reduces your monthly tax by 2070 CZK – this is possible only in one employment contract at the time (if you have few jobs), after signing the “Pink Paper” (=Prohlášení k dani, tax return statement). After signing the “Pink paper”, the tax relief is automatic and your employer should offer you this option.
There are a number of various tax reliefs and reductions that can be used (official website only in Czech). Usually an accountant is hired to do this job. There are quite a number of attachments to be submitted proving that you are entitled to the tax reductions. If you are an employee and you do not have any other income, the financial offices of your employer will offer you help – if you let them know in early February that you would like them to file your taxes. It pays to ask what reliefs and reductions you can ask for. When in doubt, you can contact us. More information on the website of Financial administration of the Czech Republic.
- Your employer can do that for you, but only if you do not have any other job, or any other income (i.e. renting a flat, shares, other business activity etc).
- You can submit it yourself online. Find a specimen online, but you have to submit the filled in form solely in the Czech language. Thus, we strongly recommend to find an English speaking accountant or even a tax consultant to help you with this task. The latest submission date is at the end of March.
- You can submit your tax return in any office of the Financial Authority (there are 3 offices in Ostrava), but if you already have temporary/permanent residence, it should be in the area of your residence. Also, if you submit your tax return once you also have to do it in the same office next year, unless you will ask the Tax Authority for the relocation of your “profile” to another tax office (in case you will move to another place).
Tax return for the self-employed with the combined income from employment and other incomes (renting flats or offices, shares profits and/or income from abroad). The income tax of 15% is calculated from the tax base. The tax base can be calculated as incomes deducted by the business expenses. In some cases, the expenses are quite constant and can be estimated. In such cases, the self-employed may register for the so-called expenditure flat rate (“výdajový paušál”) up to 60% of their total incomes (this can vary due to the type of trade licence). So, if this method were to be used, then the tax base will be the remaining 40% of the income from the trade licence activities (activities falling under paragraph 7 of the tax law). Further on, the tax base may be lowered by tax allowances and from this new “reduced tax base”, the final 15% income tax is calculated. So the final tax can be discounted by various tax reliefs, such as deducting the interest paid for a mortgage, having children, giving gifts to particular recipients, certain kinds of life insurance, etc.
The deadline for filing last year’s income tax return (but also for paying the tax), is usually April 1st. In case of processing and filing the tax return by the advisor, the deadline is postponed to July 1st, but in this case, on March 1st, the entrepreneur should submit a power of attorney granted to the tax advisor to the Tax Authority.
Czech tax domicile is a confirmation about your tax residency in the Czech Republic issued by the Financial Authority. In a very simple way the tax domicile specifies the country to which the person belongs in terms of taxation. This may happen in the event that your permanent residency is in one country, but you are working in another one, for example in the Czech Republic. If your so-called “centre of life interest” is in the Czech Republic (working here longer than 183 days in one year, renting a flat, or having a family here) you are a Czech tax resident, even if you don’t have temporary/permanent residence here. In this case, you have to pay taxes here (including worldwide incomes).
You don’t need any special confirmation to get Czech tax residency. You can claim it in your yearly tax return form. Another option is to apply for the tax domicile in person at the Financial Authority Office (there are 3 offices in Ostrava) with this form. But we recommend to come along with a Czech-speaking person, as the language spoken in the office is Czech.
There are also some advantages. If you are a Czech tax resident, you can apply for allowances for your tax base, as well as tax reliefs and it can also help you avoid double taxation in your home country.