Information on tax-residence: who qualifies as a tax resident and under which conditions
Individuals are tax residents of the Czech Republic if they have their residence or a habitual abode in the territory of the Czech Republic. Individuals with the habitual abode in the territory of the Czech Republic are those who stay there for at least 183 days in the relevant calendar year, continuously or in several periods (each started day of stay in the Czech Republic is counted). In this context, a residence in the Czech Republic means a place where the taxpayer has a permanent home under circumstances from which it can be inferred that he intends to stay in such home permanently. Individuals are tax non-residents if they are not covered by the previous sentences or if international treaties stipulate that they are tax non-residents.
Legal persons are tax residents of the Czech Republic if they have their seat or the place of effective management in the territory of the Czech Republic. The place of effective management in the territory of the Czech Republic means the address from which the taxpayer is managed. Legal persons are tax non-residents if they are not covered by the previous sentences or if international treaties stipulate that they are tax non-residents.
Information on personal income tax rates
The tax rate amounts to 15% for the part of the tax base up to an average salary multiplied by 48 and 23% for the part of the tax base exceeding an average salary multiplied by 48.
For income taxed by withholding tax at a special tax rate, this special rate is 15%, except in the case of tax residents of countries with which the Czech Republic has not concluded a valid and effective international double taxation treaty, a valid and effective international treaty on information exchange in tax matters in respect of income taxes, or which are not parties to a multilateral international treaty containing provisions on tax information exchange in that area. A special rate of 35% applies to these cases.
Information on submitting a tax return form: deadlines, online procedure
The income tax return is regulated in the Income Tax Act with the supporting application of the Tax Code. It includes deadlines and methods of filing of tax return too.
The proper tax claim (tax return, report or statement of accounts) is the basis for the correct assessment and determination of tax (finding the correct tax level), whereby the taxpayer or payer of tax fulfil their legal obligations and contribute through taxes to public budgets, or allows them to recover any overpayment of tax, if they are entitled to it.
In the event that the taxpayer or the payer of tax, or his representative has made available a data box, which was established for him by law, or has a statutory obligation to have the financial statements verified by an auditor, they are obliged only to submit the form electronically.
Submissions may only be made electronically by data message:
Information on paying tax: pay-as-you-earn or one-off-payments, deadlines
4a Tax Advances for the Income Tax from Dependent Activity
An employer for which an employee made a tax declaration for the relevant tax period shall reduce the tax advance calculated for this employee by the amount of proven monthly tax credits. The employer deducts this calculated tax advance when paying out or crediting the wage (income from a dependent activity) to the employee. A specific regime applies to selected income from a dependent activity, where the employer collects tax by withheld at a special tax rate (so-called withholding tax).
If an employee has not requested his employer to make an annual settlement of tax advances and tax allowances for the tax period, that employee usually files a tax return, usually within 3 months after the end of the tax period. If an employee has a legal obligation to file a tax return, he or she cannot request the annual settlement of tax advances and tax allowances from the employer. In the case of applying the so-called withholding tax, the employee's tax liability on the income taxed in this way is settled, but the right to file a tax return belongs to the employee.
The annual settlement of tax advances and tax allowances is carried out by the employer if the employee has received a wage from only one employer or from several employers successively, if he or she made a tax declaration and requested in writing for the annual settlement of tax advances and tax allowances from his last employer, no later than February 15 after the end of the tax period. The annual settlement of tax advances and tax allowances will be performed by the employer within 3 months after the end of the tax period.
The employer also submits the statement of the tax on income from a dependent activity for the relevant tax period within 2 months after the end of the calendar year. If the statement is submitted electronically, the period is extended to March 20.
In the case of the so-called withholding tax, the employer is obliged to pay the withheld tax to his locally competent tax administrator by the end of the calendar month following the calendar month in which he was obliged to withhold the tax. However, if the employer is obliged to file a tax return during the tax period, he is obliged to pay the withheld tax no later than the period for filing the tax return. The employer is also obliged to submit a report on withheld income tax at a special rate to the locally competent tax administrator.
4b Tax Advances for the Income Tax from Independent Activity
Self-employed persons pay tax advances depending on the amount of the last known tax liability. Tax advances are paid during the advance period. The last known tax liability for determining the periodicity and the amount of advances in the advance period is considered to be the amount that the taxpayer calculated and stated in the tax return for the period immediately preceding the tax period. For the purposes of calculating the last known tax liability for the purpose of personal income tax, the taxpayer excludes other income and related expenses.
The taxpayers whose last known tax liability exceeded CZK 30 000, but did not exceed CZK 150 000 pay tax advances for the tax period in the amount of 40% of the last known tax liability. The first advance is due by the 15th day of the sixth month of the tax period and the second is due by the 15th day of the twelfth month of the tax period. The taxpayers whose last known tax liability exceeded CZK 150 000 pay tax advances for the tax period in the amount of 1/4 of the last known tax liability. The first advance payment is due by the 15th day of the third month of the tax period, the second advance payment is due by the 15th day of the sixth month of the tax period, the third advance payment is due by the 15th day of the ninth month of the tax period and the fourth advance payment is due by the 15th day of the twelfth month. Advances are not paid by the taxpayer whose last known tax liability did not exceed CZK 30 000, by a testator from the date of his death and by the taxpayer whose tax base consists mainly of a partial income tax base from a dependent activity, from which the tax remitter was obliged to withhold tax advances.
4c Lump Sum Tax
The lump-sum tax may be claimed by self-employed persons in a tax period in which they have only taxable income from self-employment not exceeding CZK 1 000 000, with the exception of tax-exempt income, non-taxable income or income subject to withholding tax at a special tax rate. The total amount of taxable income from capital, lease and other income may not exceed CZK 15 000 for this taxpayer. They must not be self-employed persons who are VAT payers, partners in a general partnership or a limited partnership.
The lump-sum tax is the sum of the lump-sum advances. The monthly lump-sum advance for 2021 is set at CZK 5 469. The lump-sum advance includes an advance on health insurance premiums in the amount of CZK 2 393, an advance on pension insurance premiums in the amount of CZK 2 976 and an advance on income tax in the amount of CZK 100. Lump-sum advances are paid monthly for the entire period during which the taxpayer is on a lump-sum basis. The lump-sum advance is paid into the bank account of the locally competent tax administrator.
Any specific information for employees, self-employed persons, posted workers from other EU countries
The tax base from a dependent activity (partial tax base) is the income from a dependent activity. No expenses can be claimed for income from a dependent activity.
In the case of income from independent activities, the partial tax base is the amount by which the income accruing to the taxpayer in the tax period exceeds the expenses demonstrably incurred to reach, secure and maintain it. These expenses can be claimed either in a proven amount or in a lump sum (the amount corresponds to a certain percentage of income and is limited by an absolute amount). Thus, a lump-sum expenditure of 80% can be claimed for income from self-employment; max. CZK 1 600 000, 60%; max. CZK 1 200 000, 40%; max. CZK 800 000 and 30%; max. CZK 600 000 depending on the type of activity from which the income flows.
Information on how to appeal a tax assessment
The conditions for filing an appeal against a decision on the determination of income tax are regulated in the Income Tax Act with the supporting application of the Tax Code.
The submission is made to the relevant tax administrator whose decision has been attacked in the appeal. In the case of income taxes this is the competent tax office.
The competence of the tax administrator is in principle determined by the registered offices or residence of the taxpayer, or payer of tax, unless one of the tax laws states otherwise.