By 31 January 2023 it is necessary to notify the tax administrator of all income for the year 2022 paid to tax non-residents that is normally subject to Czech withholding tax, but is for some reason exempt from tax or that an international treaty provides that it is not subject to taxation in the Czech Republic.

These are typically:

• dividends
• interest and other income from financial instruments granted on credit
• royalties (including rent for the use of a movable asset – for example a machine or truck)
• settlement shares, shares in proceeds of liquidation
• remuneration for members of corporate bodies
• gambling winnings, prizes from advertising competitions and draws, prizes from public competitions and sports competitions
• income from services with the exception of construction and assembly projects, income from business, technical or other consultancy, management and brokerage activities and similar activities provided on the territory of the Czech Republic
• income from freelance or artistic and sporting activities
• income from a trust fund or family foundation
• gratuitous transfers of immovable property located on the territory of the Czech Republic and rights associated with them
• gratuitous transfers of shares in business corporations with registered office in the Czech Republic
• some other gratuitous income.

There is no obligation to report exempt income:

• of the same kind paid to one non-resident, unless they exceed the limit of CZK 300,000 per calendar month
• under article 6(4) of the Income Tax Act (from agreements to perform work up to CZK 10,000 per month) or 
• about which the taxpayer is obliged to notify the tax administrator under the Act on International Cooperation in Tax Administration.

Income that is not exempt from withholding tax must be reported to the tax office within the standard deadline for paying tax, i.e. typically by the end of the following month.

If you have paid out any of the above income or recorded it as a valid liability, do not forget to notify the tax administrator in time, otherwise you may be fined up to CZK 500,000 for violation of a non-monetary obligation.

If you would like some assistance with identifying the income to be reported or in preparing the notification itself, or for information on how to exempt yourself from the reporting obligation in the future, please, do not hesitate to contact us.

Autor: Jiří Zoubek