Good time for extension of deadline for submission of income tax return
Deadline for submission of Czech income tax return of individual as well as of companies without obligation of statutory audit for the calendar year of 2019 is 1st April 2020. The same date is set as due date of potential tax liability.
The basic deadline for submission of income tax return may be extended up to 1st July 2020 provided that the income tax return is prepared and submitted by a tax advisor, tax advisory company or by advocate (hereinafter ´tax advisor´) based on power of attorney. Only one step is needed for extension of the deadline for income tax submission and it is to submit the power of attorney granted to the tax advisor to the relevant Tax Authority in time. Provided that the Tax Authority has power of attorney in place by 1st April 2020, the income tax deadline is automatically extended. This procedure may be, except others, advantageous for taxpayers who wish to postpone tax payment by three months.
Who is obliged to submit income tax return?
In case of individuals firstly it is necessary to identify if the person is obliged to submit personal income tax for 2019 in the Czech Republic. The basic circumstances that lead to obligation of personal income tax return submission are described below. However, we would like to point of that individual situation of each taxpayer has to be examined complexly, starting for example by determining of her/his place of tax residency.
- Limit of 15 000 CZK
Taxpayer whose incomes exceeded amount of CZK 15 000 or who generated tax loss in 2019 is obliged to submit personal income tax return for 2019. The taxpayer has no obligation to submit personal income tax return for 2019 provided she/he had incomes under the limit of CZK 15 000 or only incomes that are not subject to tax, tax exempt incomes or incomes subject to withholding tax in 2019. For example the taxpayer that had in 2019 only income in form of interest from bank account is not obliged to submit personal income tax since the interest from bank account are subject to withholding tax.
- Exemption in case of income from employer
The taxpayer is not obliged to submit personal income tax return for 2019 if she/he had only incomes from one employer or consecutively from more employers and the relevant statement of taxpayer was signed, and further incomes of the taxpayer did not exceed limit of CZK 6 000 in 2019. Such taxpayer may ask the employer to do the annual wage settlement. This procedure means for the taxpayer small administrative steps in form of signing of approval with annual wage settlement and submitting relevant documents for tax credits and reliefs and amounts reducing the tax base (e.g. confirmation of bank on paid interest from mortgage, etc.) to the employer.
- Solidarity tax increase
On the other hand, the taxpayer has obligation to submit personal income tax income in case the employment income exceeded the limit for solidarity tax (CZK 1 438 992) in 2019.
- Choice by incomes subject to withholding tax
Incomes from agreement to complete a job (dohoda o provedení práce) up to CZK 10 000 per month, are subject to withholding tax. The tax is withheld and paid by the employer. The tax liability is fully fulfilled by the withholding of the tax. On the other hand the taxpayer may decide to declare these incomes in its personal income tax return and to utilize tax credits and reliefs (e.g. taxpayer credit in the amount of CZK 24 840, etc.) and amounts reducing the tax base. The same possibility of personal income tax return and utilization of tax credits and tax reliefs may be applied for tax residents from another EU member that has incomes sourced in the Czech Republic subject to withholding tax.
Legal entities have always obligation to submit Corporate Income tax return. Exemption from this obligation has, under certain conditions, only public benefit taxpayers. As it is stated at the beginning of this article, deadline for submission of Corporate Income tax return of a company that has obligation of statutory audit of financial statements for 2019, is by 1 July 2020. However, we recommend to companies considering the preparation and submission of the Corporate Income tax return for 2019 by the tax adviser based on power of attorney due to tricky tax law. Nevertheless, in this case the power of attorney may be delivered to the tax authority after the date of 1 April 2020.
We are very pleased to offer you our professional tax service in are of assessment of your tax obligations in the Czech Republic for the year 2019. Further, we can help you to extend the deadline for submission of income tax return from 1 April 2020 to 1 July 2020. Thus, if you are interested in our services or wish you more detailed information, please do not hesitate to contact us.
