The deadline for asking your employer to have your taxes balanced (February 17) or file an individual tax return (April 1) is slowly approaching. Read further how (or even if) it concerns you.
Please note: The article explains the procedure for employees only. A bit different procedure applies to self-employed or other sources of income.
How does my income tax work?
Your salary has been taxed by 15% each month, calculated from the super-gross salary (ie. 134% of your gross salary = your pay + the employer’s payments to social security and health insurance), Your employer has already taxed your monthly salary. They also reduced your monthly taxes for up to 2.070,- (ie. maximum tax relief per taxpayer per month).
This is the only automatic tax relief the employer can regularly claim for employees (plus relief for any children). Any other tax claims have to be done after the end of the year in a tax return.
What are all the possible tax reductions? Click to read our comprehensive guide.
Is my tax return done by my employer?
In most cases, yes. There are exceptions, though.
Your payroll department should contact you and ask if you want your employer to do the accounting for you. If so, you have to ask them before February 17 and provide any documentation needed (tax domicile confirmation, bank statements about your allowances, marriage certificate, birth certificates for children, invoices from kindergarten…).
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. More about this later.)
Annual tax reconciliation by the employer cannot be made to an employee who is legally required to file a tax return individually (section 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 has an active business license “živnostenské oprávnění”
- 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 1,569,552 CZK of gross salary in a year and thus paid “solidarity tax”. (A solidarity tax is applied to a monthly gross salary higher than CZK 130,796. Such taxpayers pay an additional 7% – on top of flat 15% – of the amount exceeding the monthly limit, but if the limit for the full year has not been exceeded, they got the solidarity tax back.
How do I file the tax return on my own?
A tax return 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.
The latest submission date is 1 April.
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.
Learn more about the process, the allowances, and reliefs in our guide Employee’s income tax.
Czech tax residence
To apply 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.
This article has been written in cooperation with a registered tax consultant Michael Hájek from Bell Consulting.