Tax system

Posted by bara 07/02/2014 at 14h55

In the Czech Republic, a person whose taxable income is higher than 15,000 CZK, during the calendar year, has to always report his Czech personal income tax return. In most of the cases employers are responsible for carrying out this duty for their employees. There is a possibility to claim tax reductions for paid mortgage interests, paid life insurance, gifts and tax deductions for dependent spouse and dependent children. A joint tax return of married couple is not possible in the Czech Republic since 2008. People have to submit their income tax return till April 2. There is possibility to extend the date of submission to July 1, but only if it is prepared by a registered Czech tax adviser. 
 
Czech citizens or people who have a permanent residency in the Czech Republic have to pay tax on their income earned inside the Czech Republic and abroad. Foreign residents and people employed in the Czech Republic only have to pay tax on their income earned in the Czech Republic. Personal income tax is paid by employees and small businesses or so called self-employers. The personal income tax rate is a flat rate of 15%. Employers are obliged to deduct tax advances under a payroll deduction scheme. Self-employers pay tax advances by themselves and file an income tax return every year to settle any differences between the amount due and amount advanced. 
 
There are general tax credits which can be claimed in the Czech Republic. Tax credit of 24,840 CZK per year can be claimed for the taxpayer. Czech tax residents and also Czech tax non-residents who have more than 90 percent of the income from Czech sources can claim tax credit of 13,404 CZK annually per dependent child. Tax credit of 24,840 CZK can be claimed for a spouse whose own income does not exceed 68,000 CZK per year.

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