The aim of this article is to point out the obligations stipulated by applicable legislation that has, incidentally, undergone significant changes, but also the effects of the general pardon with regard to the current epidemiological situation.

1. Deadlines for submitting the income tax declaration

General rules

For a long time, we had been used that tax return is submitted by the end of March and those, who have a consultant or are subject to obligatory audit, could submit tax return by the end of June. These established deadlines are changing due to the amendment of the Code of Tax Procedures. The deadline, when tax return needs to be submitted within 3 months from the end of the taxable period, remains preserved, but the deadline is newly prolonged, if the tax return is submitted electronically after this date, to 4 months from the end of the taxable period, i.e. for the year 2020 until 3 May 2021. For the taxpayer (either for the personal or corporate income tax declaration), the basic deadline thus ends on 1 April 2021, whether he submits the tax declaration physically or electronically, and there is the option of an extra month in case of electronic submission, if not submitted within the basic deadline, if submitted electronically by 3 May 2021.

For tax entities, for whom a tax consultant submits the tax return and who will not use the basic three-month deadline or for companies subject to obligatory audit, the deadline remains postponed to six months after the end of the taxable period, i.e. until 1 July 2021.

Connection to the payment of tax remains preserved (for more details see part 2 of this article).

 Another important novelty is that in case of representation by a consultant, the obligation of applying the power of attorney at the tax administrator within the basic three-month deadline is left out. It is sufficient to prove representation within the deadline for submitting tax return. If you do not manage to resolve the power of attorney with your tax consultant as of 1 April, it does not matter, the tax return can still be submitted within the prolonged deadline by the end of June.

At the same time, the deadline (1 April 2021) is newly set up in such a way that it also applies to taxpayers, who have the tax declaration compiled and submitted by a consultant but decide to submit it within three months after the end of the taxable period. The reason for this adjustment is that taxpayers with an overpayment would not need to wait until August for the money to be returned, but so the deadline for return would begin to run from 1 April already (this does not apply to companies subject to obligatory audit, of course).

To make the picture complete, we add that taxpayers are legislatively enabled to use the option of submitting a Request for prolongation of the deadline for submitting the tax declaration, which needs to be duly justified, however.  The deadline can be prolonged by a maximum of 3 months or to 10 months after the taxable period has ended in case of foreign income.

If the tax declaration is not submitted within the regular deadline, the tax administrator will impose a fine for late tax statement (article 250 of the code of tax procedure). It is possible, nevertheless, to use a so-called protective period of up to 5 workdays after the specified deadline (no sanction is imposed in this situation). 

In case a fine for late tax statement is imposed, it is newly possible to request its waiver from the tax administrator, for justifiable reasons.

The rules based on the issued general pardon from 8 March 2021

To add to the number of changes, everything is changing slightly more for the taxable period of the year 2020. With regard to the declaration of the general pardon of the finance minister, submission of the tax declaration in paper form without a fine imposed for late submission of the tax declaration has been enabled until 3 May 2021, and in case of electronic submission until 1 June 2021. The deadline of 1 July 2021 for companies with obligatory audit or tax declarations processed by a consultant remains unchanged.

We would like to point out that this is not a prolongation of deadline for submitting the tax declaration, but a waiver of sanctions, which may have negative impact for example on the issuing of a positive clearance certificate. At the same time, we point out, as stated above, that this decision only applies to the taxable period of the year 2020.

2. Deadlines for paying income tax

General rules

The deadline for paying tax relates to the specified deadline for submitting the tax declaration. This means that the tax must be paid on the date of the deadline for submitting the tax declaration at the latest (note: the finance must be credited to the bank account of the tax administrator on that day already).

The so-called protective period, when no sanction is imposed, applies to the payment of tax as well. If not observed, interest is prescribed, if it exceeds the sum of CZK 1,000.

We would like to point out that beginning on 1 January 2021, its percentage has been lowered and it newly derives from stipulations in the Civil Code.

If the taxpayer does not have the money to pay the tax obligation, he has the option to ask the tax administrator to permit instalments or postponement.

Another operation for reducing the effects of late payment and prescribed late payment interests is to request their waiver. If justifiable reasons exist, the tax administrator may pardon late payment interests partially or completely.

The rules for paying tax based on the general pardon issued by the finance minister on 8 March 2021

With regard to the issued general pardon that enables submitting tax return without sanctions up to one month later (for written submission by 3 May, for electronic submission by 1 June 2021), late payment interest is waived in case this tax is paid within this deadline.

Overview table relating to tax obligations

Abbreviations used: PIT – personal income tax declaration, CIT – corporate income tax declaration.

Unprolonged deadline = the basic three-month deadline after the end of the taxable period.

Prolonged deadline = prolongation of the deadline to 4 months after the end of the taxable period in case of electronic submission after the basic deadline or to 6 months after the end of the taxable period in case of representation by a consultant or in case of companies that are subject to obligatory audit.

3. Surveys for social and public health insurance

Social insurance of self-employed persons (OSVČ)

General rules

A person, who performed a self-employed activity for at least a part of the calendar year, is obliged to submit a Survey of income and expenses of self-employed persons to the respective Social security administration. This survey must be submitted within one month from the deadline for submitting the tax declaration at the latest.

The underpayment of insurance for the year 2020 that follows from the survey is due within 8 days after the overview has been submitted.

General pardon

A self-employed person, which does not submit tax return via a consultant, has the option of submitting the Survey of income and expenses for the year 2020 within a longer deadline, without sanctions. The deadline has been set at 30 June 2021. The condition for a waiver of the sanction is that a potential insurance underpayment will be paid within this deadline as well.

If the tax declaration is submitted by a consultant, the deadline of 2 August 2021 remains in operation.

Health insurance of self-employed persons (OSVČ)

Based on amendment of the public health insurance act no. 65/2021, which took effect on 10 April 2021, the last day, by which all self-employed persons need to submit the Survey of income and expenses for the year 2020, is Monday 2 August.

Unlike the Surveys submitted to the social security administrations, this applies to tax declarations submitted by a consultant as well.

The taxpayer must pay the insurance underpayment within eight days from the date, when the Survey was actually submitted or by which it should have been submitted according to the law.

4. Reporting exempt income
   
   

General rules

If you are a payer of the personal income tax and you received exempt income in the year 2020, which is higher than CZK 5,000,000, you are obliged to announce this to the tax administrator. This announcement needs to be submitted to the tax administrator within the deadline for submitting the tax declaration, which applies to you, in compliance with article 38v of the Income Tax Act. There is a fine, the amount of which is firmly fixed, impending for failure to announce this income. 

The rules based on the issued general pardon

It is possible to submit the tax return without sanctions up to one month later than the deadline for submission, that is unless the prolonged deadline of 1 July 2021 applies to you.

We believe that this article has helped you clarify certain inaccuracies you may hear or read from various media sources at present. In case of any questions, please, do not hesitate to contact us.