As every year, the due dates for the yearly income tax return for natural persons are approaching. Therefore, we would like to bring to your attention the most important dates not only for individual returns but also for tax payment. In addition to the obligation of personal tax return submission, some natural persons are also obliged to submit overviews of income to their health insurance company and social security authorities. The dates associated with these submissions are stated below.

Tax return submission

The obligation for personal income tax return can arise for you even if you are an employee (without having the chance to ask your employer for a yearly tax calculation). This could happen in the following situations:

• you have income from business, rent, capital assets, or other income exceeding CZK 6 000,
• you were employed with two or more employers at once,
• your income from employment has exceeded the amount of CZK 1 355 136 (in 2016 the limit was CZK 1 296 288) and thus you are obliged to pay the solidarity tax,
• you ended your contract on private life insurance early or have received a payment from this insurance, which was not a benefit, and thus are obliged to tax your employer’s contributions previously exempted from tax.

The time period for tax return submission is 3 months after the end of the tax period. The time period for submissions of tax returns of income of natural persons for 2017 will end April 3^rd, 2018. Because April 1^st is a Sunday and the day after that is a bank holiday, the due date has been moved to the earliest working day, that is April 3^rd.

If your tax return is done by a tax advisor, the time period is extended until July 2^nd, 2018. For the period to be extended it is necessary to submit the appropriate authorisation by April 3^rd the latest. It is also possible to ask the tax office for a time extension of up to 3 months. However, in such cases you must state a reason for the extension. The request must be approved by the tax office and is subject to a charge. Same as the authorisation, this request must be submitted before the end of the period. If your earnings also include income which is subject to tax abroad, the period for submission can be extended on request to up to 10 months. This extension must again be approved by the tax office and is subject to a charge. The maximum extension for a tax submission would then be until November 1^st, 2018.

Tax payment

The time period for tax payment is the same as the time period for tax return submissions. Specifically, if a tax return of a natural person is not done by a tax advisor and the period has not been extended at all, the tax is due April 3^rd, 2018 the latest. If your tax return is done by a tax advisor, the due date for income tax of natural persons payment is July 2^nd, 2018. In connection to this we would like to remind you that if you are paying tax through cashless payment (e.g. bank account transfer), the money must be registered in recipient’s bank account on the due date the latest.

Penalties

If you don't submit your tax return on time, you will most likely be issued a fine for late submission by the tax office.  This fine is issued if the delay is longer than 5 working days. It is calculated as 0,05 % of given tax for each day of delay. The fine can never be more than 5% of given tax or than CZK 300 000.

In the event of late payment of tax the tax office will issue a default interest. The default interest will be issued if the delay of payment is more than 5 working days. The amount of the interest corresponds with the REPO rate announced by the CNB (applicable the first day of the appropriate calendar half-year) increased by 14%. Thus, for the first half of 2018 the default interest is set at 14,5%.

Deferment

In certain cases the tax office can allow deferment of tax or its payment in instalments. If tax subjects want to request this relief, they must submit an official request for deferment. This request is subject to a charge. If the tax office complies with the request, there won’t be default interest of 14% plus the repo rate imposed on the tax subject but only interest from the deferment amount of 7% plus the repo rate. If there is sufficient reason, one may ask the tax office for an exemption or partial exemption from default interest or interest from the deferment amount.

The topic of consequences in case of non-compliance with tax duty is quite complicated and could not be covered in this article. If you should have any questions, we are here to help you.

Overview of income and expense for 2017

Persons with income from self employment have the obligation to submit this overview twice. First to their health insurance company and second to the Czech Social Security Administration.

The due date for submission to the CSSA is May 2^nd, 2018. For submission to the health insurance company the date is May ^3rd, 2018.

The extension of the submission period for people whose tax return is done by a tax advisor applies here as well. The health insurance company and CSSA must be informed of this no later than April 30^th, 2018. In this case, the due date for submission of the overview to the CSSA is August 1^st, 2018. And to the health insurance company it is August 2^nd, 2018.

Even self-employed persons who do not have the obligation to submit a tax return must submit this overview to their health insurance company and to the CSSA, no later then April 9^th, 2018 and July 31^st, 2018, respectively.

Insurance balance due payment

The due date for payment of possible balance due for the year 2017 is 8 days after the day on which the overview of income and expense was, or should have been, submitted. Failure to observe this deadline results in a penalty of 0,05% of the amount of balance due for each day of delay.

It is necessary to mention here, that since 2016 the bank accounts of all health insurance companies and social security administrations have been at the CNB. Therefore, we do not recommend sending the payments to the original bank accounts, even though they should be forwarded to the current CNB account in such cases.

Electronically or by post?

If you have your data box made accessible, you are obliged to submit your tax return electronically. If you fail to do so, you risk a fine of up to CZK 50 000. If you do not have a data box, you can submit you tax return on a form in paper form either in person, by post, or through the portal of the Financial Administration with a recognised electronic signature. 

The income and expense overview can be submitted to a relevant branch of the CSSA in paper form, electronically through the CSSA form (if you have a recognised electronic signature), to a designated data box of the CSSA (if you have a data box), or via the e-podatelna system or to a data box of a relevant branch of the CSSA, if you have a recognised electronic signature or have a data box.

Filled out and completed paper form of the overview for the health insurance company can be submitted personally or by post. The filled out form can also be submitted via a data box or another electronic form, depending on your health insurance company.

Notification of exempt income

Last but not least we would like to remind you of the obligation to notify which concerns natural persons and has been here since 2015. This obligation applies to income exempt from income tax, which has exceeded the amount of CZK 5 000 000. Exempt income includes for example: income from sale of securities, from inheritance, donation etc. The obligation to notify does not arise in the case of tax exempt sale of immovable property which is registered in the land registry of the Czech Republic.

There is no prescribed form for this notification. However, you can find a recommended example of a form on the website of the Financial Administration.

The latest date for the submission of notification of exempt income is the same as the date for tax return submission, that is April 3^rd, 2018.

Failure to notify may lead to a penalty.  This penalty can amount up to 15% of the amount of the unreported income if the taxpayer does not fulfil the obligation even after having been notified by the tax office.