Employee’s income tax

The gross salary of an employee is deducted each month automatically by an employer for 1) health insurance (4,5%), 2) social security contributions (6,5%), 3) income tax.

Income tax is 15% calculated from the gross salary (the “supergross” salary concept has been canceled from 1.1.2021)  and your employer automatically reduces your monthly tax for up to 2.570,- per taxpayer*.

This is the only automatic tax relief the employer can regularly claim for employees (plus relief for children). Any other tax claims have to be done after the end of the year in a form of annual tax reconciliation (done through an employer) or individual tax return.

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*The basic tax relief for every person, Czech tax resident or not, is 30 840,- per year (2 570,- per month). And you are entitled to the full year tax relief if you worked (or lived) in Czechia for a single month or six or twelve. So if you came in the middle of the year, your employer applied the monthly tax relief to a maximum 2 570,- each month you worked, but if you paid more income tax, you can claim the tax relief for the months before you came 😉  Ask your employer for annual tax reconciliation after the end of the year or file your individual tax return.

In most cases, no. Your employer does your taxes automatically. There are exceptions, though.

If you had salary only from employment and one employer at a time, your employer takes care of the taxes and you don’t have to (but can) do anything.
Your payroll department should contact you every year and ask if you want your employer to do the yearly “reconciliation” for your salary from the last year (at the beginning of a year, by mid-February). They should take into account any applicable tax allowances from the tax base (paid charity gifts, mortgage interests, private pension savings, life insurance, union fees) and tax reliefs (tax relief for a taxpayer even for months he or she did not work in the CR; for a spouse at home; children; kindergarten; studies; disability).

(To apply some of the tax allowances and tax reliefs, your employer may ask you to bring a confirmation about your tax residence in the Czech Republic. Such a document is called Czech tax domicile.)

If your employer did not apply tax allowance or tax relief during the year and does not want to do it after the end of the year, you can get it back after the end of the year on your own (or with an accountant/tax advisor) in an individual tax return.

Exceptions

Annual tax reconciliation by the employer cannot be made to an employee who is legally required to file a tax return individually (§38g, 586/1992 Col.) This applies to:

• an employee who had more than one job at a time (or other jobs not taxed by withholding tax each month) even if it was for one day
• an employee who received any other income (over 6,000 CZK) worldwide (business activity, sales, renting out, shares, capital gains, etc.)
• an employee who received over 1,867,728 CZK of gross salary in a year and thus paid “higher tax“. (A higher tax is applied to a monthly gross salary higher than CZK 155,644. Such taxpayers pay an additional 23% of the amount exceeding the monthly limit, but if the limit for the full year has not been exceeded, they got the tax back.)

If you have to or want to file your tax return, it can be submitted at whatever office of the Financial Authority without any respect for your local affiliation.

Download any personal income tax forms here. Although only forms in Czech are accepted, you can see and compare the English translation in the instructions. Electronic submission is possible, but you need an electronic signature or data mailbox or compatible banking login from Ceska Sporitelna, CSOB, Komercni banka, Raiffeisen, AirBank, Creditax, Fio, Moneta, UniCredit ) via the Financial office portal mojedane.cz (in Czech only). See the video guide below.

The deadline to file a tax return in a paper form is April 1. If you file the tax forms via electronically, the deadline is May 1. And if you ask a certified tax advisor to do the taxes for you, you get extra time till July 1, but you have to sign the power of attorney to the tax advisor before April 1.

You can, of course, file all the forms on your own.  Quite often you end up needing the help of a professional accountant or a tax advisor to evaluate your situation, your possible gains and help you to file all the forms and supplement those with necessary attachments and documentation. If you sign a power of attorney to a certified tax advisor, your submission date is three months later – 1 July.

We, at the Brno Expat Centre, cannot do the administration for you. We can only suggest some verified English-speaking tax consultants – see the very bottom of this page.

Video guide on How to fill out a tax report via the Moje Dane portal:

https://www.facebook.com/100064646351048/videos/645914203962428

Allowances from the tax base

You can adjust your tax base for some expanses recognized by the state before taxing – and come to an “adjusted tax base”.

A 15% income tax is calculated from the adjusted tax base and tax relief is the “discount” on the final tax bill.

Tax reliefs

1. These benefits can only be applied to a Czech tax resident or non-resident (EU citizen) having more than 90% of his worldwide incomes from the Czech sources.

“Czech tax domicile” is a confirmation of your tax residency in the CR issued by the Financial Office. You can get it only after living here for at least six months and if you meet the criteria (see the chart below).

You may be asked by your employer in the CR or by your national government (ie. Greek tax office) to present the tax domicile to them.

To apply for some of the tax allowances and tax reliefs, you need to prove that you are a Czech tax resident. In an individual tax return (submitted by you) it’s enough to state this and support your claim with some documents (accommodation and employment contracts, etc.) When your employer does the return for you and takes the responsibility for the claims you’re stating, they may ask you to bring an official confirmation about your tax residency in the Czech Republic – Czech tax domicile. Read our guide to learn how to get it.

The determination of tax residency and filing the tax return form is often a complicated task for tax advisors let alone for normal people.

If your employer has not helped you with the matter, you can visit a professional. Anyone who is not sure about their tax obligations can hire a professional registered tax advisor or accountant.

You have a few options:

1. hire a tax adviser for consultancy and assistance with the tax return forms, but sign the forms yourself;
2. sign a power of attorney in favour of the tax advisor and have them completely take over the process; or
3. use an online tool (such as czechtaxesonline.cz) to help you file the right boxes in the form and print it out at the end and send it to the Financial office.

The option “2” brings at least two advantages. Your deadline will be prolonged for 3 months until the end of June which gives you additional time to organize all necessary documents. Secondly, the tax advisor assumes full responsibility for the tax return and takes care of possible follow-up negotiations with the Tax Authorities.