Self-employed persons submit a tax return if their annual income exceeds 15,000 kroner. If entrepreneurs also have income from employment, the income limit is reduced to six thousand per year. It is more complicated for employees.
Under normal circumstances, the equivalent of a tax return for employees and so-called contractors is the annual tax calculation. Taxpayers must sign it every year by mid-February, in their employer’s accounting department.
In order to do this, the accountants should be provided with all documentation on possible tax discounts or possibly deductible items. During the annual tax calculation, there may be an overpayment of tax and the taxpayer is subsequently entitled to a payment of money (in March).
What is the annual tax calculation?
The tax calculation is a summary overview of paid salaries, tax advances and social and health insurance advances. It is provided by the payroll accountants of the companies that employ you. “However, the annual calculation is not automatic, the employee must request it from his employer, always by February 15,” reminds advisor Michal Dvořáček.
Employees usually have their income tax withheld from their gross pay each month. However, in some cases they cannot avoid filling out a tax return. And subsequently, the company they work for will not ask for the aforementioned annual tax collection.
Employees who at different periods during the year only had taxable income from one or more employers, or who have no other secondary income, do not have to worry about taxes.
When the employer pays the tax advance…
The taxpayer (i.e. the employer) calculates the advance payment for employee income tax from the basis for calculating the advance payment. The basis is the monthly gross salary rounded to the nearest hundred crowns. So, if you earn, for example, 44,850 kroner per month, the basic amount is 44,900 kroner. The advance tax is therefore 15 percent of CZK 44,900 – or CZK 6,735. Only if the base exceeds four times the average salary (currently 161,296 kroner), a larger deposit (23 percent) is deducted from your earnings above this limit.
Others, however, must submit their applications themselves. In practice, this most often refers to those who generate additional income from business during the year, work for two employers at the same time or have income from rent (once from the sale of real estate) and the like.
In that case, employees inform their employer and separately fill out and submit an application. The company they work for will provide them with the necessary documentation. The return (DP) must then be submitted no later than April 3, 2023 (the first working day of the month), or May 2, if submitted electronically.
An employee must file a tax return himself if he has:
1) Additional income as self-employed
If an employee earns additional income as a self-employed person while working in a basic employment relationship, he must report the secondary income from self-employment, in the SOE, which he submits under the same conditions as self-employed persons who do business as their main activity.
SPECIAL: Income tax 2022
2) Income from rent
The employee must also report income from renting out his real estate and properly tax it. In such cases, he fills out a classic four-page tax form and must ask his employer for a certificate of taxable income for 2022, which is a mandatory attachment to the tax return. He then lists all his annual income (ie from rent and employment) in his tax return.
3) Income from capital
In the tax return, the employee must also report income from capital (profit from a company, etc.). However, he does not have to fill in the form, for example, interest on a savings account or from investment funds.
Let’s add that employees with annual taxable income acc Articles 7 to 10 of the Law on Income Tax (from self-employment, income from capital, rent or other income) are not obliged to submit a tax return only if their other income does not exceed 6 thousand crowns. We remind you that from 2023 this limit will increase to 20 thousand crowns.
4) Occasional income
The employee must also submit a tax return in case of occasional income, if it exceeds 30,000 crowns per year. Read what is casual income at Businessinfo.cz.
5) Two jobs within a month (or in the same period)
The simplified DP form of two pages can be used by those who have taxable income only from dependent activity (employment). These employees submit their own tax return if they work for at least one month a year for two employers, when advance income tax is deducted from both incomes. This also applies to so-called contract workers, for example when they work for two companies at the same time on the basis of an employment contract with a gross monthly salary of SEK 3,500 or more for each employer.
6) Sale of real estate
In some cases, the employee must file a tax return if he has sold real estate. However, income from the sale of real estate is often exempt from tax. More in Article 4 of the Law on Income Tax.
7) Cancellation of life insurance
If an employee cancels life insurance, supplementary pension insurance or supplementary pension savings before the deadline for payment established by law, he is obliged to submit a tax return and provide all tax benefits approved by the state in previous years.
Even if the employee is not obliged to separately submit DP, he can do it voluntarily, for example, if he does not have time to submit all the necessary certificates for possible discounts or deductions to his employer’s accountant.