Who pays income tax?

If you are a Czech citizen or have permanent residency in the Czech Republic, you have to pay tax on your income earned inside the country and abroad. If you are a foreign resident and you are employed in the Czech Republic, you only have to pay tax on the income you earned in the Czech Republic.

If you are an employee, your employer is obliged to deduct the appropriate taxes directly from your salary on a monthly basis. All the paperwork will be done for you.

Self-employment

If you are self-employed the situation is more complicated. Within 30 days of receiving your trade license you should inform the relevant financial office. The registration process may take quite a long time. At the end of the registration you will be issued a tax identification number. As a self-employee you will have to pay your income tax in advance. The advances are determined on the basis of the previous year’s tax return. If you are starting a new business the prepayments are calculated on the basis of your expected income.

The terms of submitting the declaration

The income tax declaration along with your tax payment has to be submitted by March 31 each year. It is also possible to submit the declaration by June 30, but only with a special statement by a tax adviser, the plna moc, specifically saying that you are going to submit all documents by the end of June. If you miss any of these deadlines a fine will be incurred.

It is important to obtain a professional advice because tax declaration is very complicated to fill in.