What are the rules for filing a Tax Return in the Czech Republic?
As spring approaches, many will be asking about the requirements for filing a tax return here, especially those that have recently obtained tax residency here.
Tax return tips for expats in the Czech Republic include several key rules and there are key deadlines that taxpayers need to be aware of. However, many may choose to use a tax adviser, which has the advantages of extended filing dates and local tax expertise to ensure tax compliance.
Who Must File a Tax Return?
Individuals: Anyone whose annual income subject to personal income tax exceeds CZK 50,000 must file a tax return. This includes employees, self-employed individuals, pensioners, and students with multiple part-time jobs or self-employment income.
Self-employed Individuals: Those with income over CZK 6,000 per year are required to file.
Non-residents: EU/EEA residents can file if they earn at least 90% of their income in the Czech Republic.
Deadlines for Filing
Tax return deadlines vary according to how you choose to file:
Paper Form: The standard deadline is April 1st following the tax year.
Electronic Filing: This extends the deadline to May 1st.
With a Tax Advisor: If you use a certified tax advisor, you have until July 1st to file.
Tax Rates and Thresholds:
Income Tax Rates: For 2025, trade license holders face a tax rate of 15% or 23%, with the higher rate applying to incomes above CZK 1,676,052.
Exemptions: There are exemptions for capital gains on securities or shares held for specific periods, with a cap of CZK 40 million on exempt income from 2025.
Deductions and Reliefs:
Basic Tax Relief: Every employee is entitled to basic tax relief, along with potential reliefs for students, children, etc., depending on residency status.
Non-Taxable Income: Certain types of income like donations for charitable purposes might be deductible.
Special Conditions: For instance, claiming a spouse with lower income requires the spouse to provide daily care to a child under 3 years old in 2025.
Filing Methods
In Person: You can file a tax return at the local tax office with a paper form.
By Mail: Ensure you have confirmation of delivery.
Electronically: Required if you have a data mailbox; otherwise, optional but with an extended deadline.
Using a Tax Advisor: This option gives you an extended deadline for tax return submission.
Additional Considerations:
Social Security and Health Insurance: Self-employed individuals have mandatory payments, with rates increasing in 2025 based on 55% of the tax base for these contributions.
Penalties: Late filing or inaccuracies can lead to penalties, with the maximum penalty for late filing being CZK 300,000 or 5% of the claimed tax amount.
Taxpayers should ensure they understand these rules or consult with a tax advisor to navigate the complexities of the Czech tax system effectively- often the safest option.
