Methods to File Czech Revenue Taxes: A Full Information for Foreigners
Anybody dwelling and dealing within the Czech Republic, Czech Republic or overseas is required to pay revenue tax. Revenue tax returns (daňové přiznání) should be filed by holders of an lively skilled license (self-employed), staff with different revenue in extra of CZK 6,000 and unemployed with capital achieve, hire or different revenue exceeding CZK 15,000 per yr.
Resulting from COVID, Brexit, and new Czech laws applied in 2020, there are just a few necessary modifications to think about when submitting your taxes this yr. For extra data on how, when and the place to file your Czech revenue taxes, in addition to necessary terminology associated to the method, observe our step-by-step information beneath:
Collect these necessary paperwork
The paperwork wanted to file taxes fluctuate relying on whether or not you might be an worker or whether or not you will have a enterprise license or each. If an individual is employed, they may want a taxable revenue certificates from their employer.
Enterprise license holders should compile their paid invoices for the given calendar yr. Flat-rate bills or precise bills associated to their enterprise could also be utilized. If a flat payment is used, registrants aren’t required to maintain any receipts or invoices obtained.
Whether it is extra helpful to make use of the precise prices, the depositor ought to make a listing of the prices paid for your entire yr; receipts must be stored for an additional three years. Amongst these actual prices is the whole lot to do with working a enterprise. The exceptions are the price of meals, refreshments and eating places. Car prices may be deducted if sure situations are met.
Holders of a enterprise license ought to decide the advances they’ve paid for pension insurance coverage (ČSSZ, or PSSZ in Prague) and public medical health insurance (VZP or supplier with which you might be registered). Taxpayers ought to mechanically obtain this data after the tip of the yr (you probably have an digital account with these establishments, the knowledge is offered on-line). These figures might be wanted to organize an announcement of self-employed revenue.
Take into account these frequent deductions
Filers should additionally get hold of affirmation of their deductions. Probably the most broadly used and well-known deduction is mortgage curiosity; with a view to declare it, these tax returns should show the quantity of curiosity they paid the earlier yr by way of a affirmation from the financial institution.
If the taxpayer has dependent kids, one of many mother and father can declare a deduction for them. The opposite guardian should signal a declaration stating that they won’t declare a deduction for the youngsters.
Likewise, if a taxpayer needs to assert a deduction for a partner who is just not working, the latter should signal a declaration indicating that their revenue didn’t exceed a sure restrict in that yr. Presently, this restrict is 68,000 CZK for the entire yr. You can even deduct funds for kindergarten, precisely as a lot as tuition (for public colleges round 1000 CZK / month) though the whole is proscribed and you can not deduct the complete value of personal kindergarten, for instance.
Discover out if that you must register for VAT
For worth added tax (VAT) or as it’s known as within the Czech Republic daň z přidané hodnoty (DPH) folks have to observe their turnover each 12 months, and if it exceeds CZK 1 million, they’re compelled to register for VAT. An individual who points an bill to a buyer who’s registered for VAT in one other EU state should additionally register for mild VAT (identifikovaná osoba) at their native tax workplace (finanční úřad).
Taxpayers should additionally register for mild VAT in the event that they obtain enterprise companies from an organization registered for VAT in one other EU member state.
Pay attention to COVID exemptions for pension and medical health insurance
From March to August 2020, because of COVID, the Czech Social Safety Administration (ČSSZ) and the medical health insurance corporations have waived minimal advances for all self-employed individuals who have completed enterprise throughout these months. Nevertheless, after the tip of the yr, these folks should present an announcement of revenue and expenditure (přehled) and calculate their insurance coverage. The whole quantity for the yr is then calculated within the assertion. Within the occasion of an overpayment, the insurance coverage firm offers you funds or you need to use these funds as a deposit for present funds.
The minimal quantity of advances for 2021 is CZK 2,588 for social insurance coverage and CZK 2,393 for medical health insurance.
COVID has additionally sparked particular issues. For the 2020 taxes, the self-employed aren’t required to declare the particular advantages obtained within the type of compensatory premiums comparable to bonus kompenzační, pětadvacítka, orthe “nursing care” service (ošetřovné) many individuals got to remain at dwelling with kids because of college closures in 2020.
Understanding the Czech tax domicile
The Czech tax workplace assumes that you’ve a tax domicile within the Czech Republic you probably have everlasting lodging within the Czech Republic, that’s, you aren’t quickly dwelling in a resort and on the similar time visited within the Czech Republic. for over six months.
On this case, the Czech Republic considers you to be a Czech tax resident and you might be required to report your worldwide revenue in your Czech tax return. If this revenue was taxed elsewhere on the earth, then the Czech Republic, on the premise of a double taxation treaty, permits the Czech tax discount of the tax paid overseas.
If you’re a Czech tax resident, you even have the choice to assert numerous deductions in your tax return, comparable to deductions for a non-working partner, deductions for youngsters, mortgages, and so forth.
Tax non-residents of third international locations don’t have this proper. And if you’re a tax non-resident of the Czech Republic, however you might be additionally a tax resident of one other member state of the European Union, you possibly can solely declare these deductions if the Czech revenue is at the least 90% of your revenue.
Nationals of third international locations exterior the European Union can not declare any deduction if they aren’t Czech tax residents. Britons dwelling within the Czech Republic are now not thought of EU residents and should adjust to Czech tax guidelines for third nation nationals. Beforehand, UK residents might reap the benefits of the essential tax deductions talked about above, nevertheless, after Brexit they’re thought of third nation nationals that means that in the event that they weren’t Czech tax residents they might not couldn’t declare deductions for youngsters within the Czech tax return of a associate who doesn’t work.
Take into account the professionals versus cons of the brand new flat fee tax
The flat-rate tax (paušální daň) was launched by the Czech authorities. in 2021. Taxpayers claiming solely a flat tax should pay the tax workplace a complete month-to-month quantity of roughly CZK 65,000 per yr. This quantity will change barely annually. In 2021, it’s CZK 5,469 per thirty days. This quantity consists of the cost of pension insurance coverage, medical health insurance and an advance of CZK 100 on revenue tax. Individuals who use this plan do not must file revenue tax after yr finish, which is a giant plus. You can’t register for the flat-rate tax if you’re topic to VAT, if you’re an worker or you probably have another sort of revenue other than self-employment.
Nevertheless, asking for a flat tax also can have some disadvantages, particularly for foreigners. Will probably be inconceivable to request a tax evaluation, for instance, or a duplicate of any tax return filed, as no return can have been filed, so it will likely be very tough to show to the overseas monetary authorities that you’ve paid taxes in Czech. . Republic.
File your taxes electronically, by mail or in particular person
Individuals who file Czech tax returns now not want to take action in particular person. The Ministry of Finance lately launched its on-line tax platform Mojedane21.cz. Whereas the portal is barely out there in Czech, enhancements have been made to make it extra user-friendly. One other benefit of not submitting taxes by way of conventional paper types is the prolonged timeframe (see beneath).
Along with private revenue tax, the portal also can handle highway tax, company tax, VAT and property tax.
A brand new digital id characteristic was launched earlier this yr, which signifies that it’s doable to log into the tax workplace on-line utilizing the net banking login particulars, for many who do banking transactions with Česká spořitelna, Komerční Banka or ČSOB.
An alternative choice is to print the finished tax types and mail them. These must be despatched to the tax workplace within the district the place you reside. For Prague, this implies the particular district of the town. A listing of addresses may be discovered on-line. Varieties may be discovered on the web site of the tax workplace.
Varieties will also be filed on the tax workplace, however given the present scenario, you will need to examine prematurely the hours of operation that are prone to change because of the pandemic, in addition to to obey the principles of ‘hygiene.
Pay attention to the deadlines
The standard deadline for submitting taxes is March 31. This yr, nevertheless, because of the present Covid lockdown, the Czech authorities has prolonged the deadline to Could 3, 2021 (paper types) and June 1, 2021 (digital submissions). As in earlier years, submitting your taxes by means of a licensed tax advisor offers you a further three months after the tip of March, with a deadline of July 1, 2021.
Assist is offered on-line for submitting taxes. CzechTaxesOnline.cz guides folks by means of types by means of an English query and reply format, then permits customers to print accomplished types or file them on their behalf. The sister website ExpatTaxes.cz has up-to-date data on tax legal guidelines.