Whether you want to make money in the Czech Republic or get your income from abroad, knowing where and how you pay taxes in the country of your choice is crucial. It is important to note that taxes are famously complicated so take this article more as a general overview of things you need to do rather than a step-by-step guide. With that said, let’s dive in.
When do you need to file taxes in the Czech Republic as a foreigner?
The general rule of thumb is that you are a freelancer or a business owner, even a small business owner, and you operate in the Czech Republic. You are expected to do your tax returns or hire a professional to do it for you.
However, if you’re an employee of a Czech company, your tax returns will be done by the company’s accountant unless you request otherwise. So, for example, if you work for a language school as a full-time teacher, you don’t have to file your taxes, but if you are a contractor and work with many schools, you must file your taxes. If you’re unsure, ask your employer.
What taxes do I pay in the Czech Republic?
You pay three main taxes: income tax, social security contribution, and mandatory health insurance contribution. There is also property tax or VAT, but these are more specific – the first three are required. Overall, your tax might be around 15% of your income as a foreigner, with an additional 7% if you are a high-earning individual.
This also translates into what is considered a taxable income in Czechia. It would help if you taxed income from employment, entrepreneurship, capital (like stocks), leasing (rent and such), and any other sources of income from inheritance to winning a lottery. This is only offset by the deductions, which you can do, especially if you own a firm.
Submitting Czech tax returns
With the COVID pandemic wreaking havoc across all administrations, the deadline has been a bit more flexible in recent years, ensuring that people have enough time to sort out their taxes correctly. The general rule of thumb is that if you submit your tax returns yourself, you should do so by March 31st, while if you use a particular service, you can file your taxes by July 1st.
However, your tax advisor or auditor needs to have power of attorney to file your taxes for you.
You can submit your taxes online through the tax portal of the Czech Tax Office or in person in the nearest branch of the Tax Office that is in your district. Neither place is very English friendly, so if you can, make sure you bring a Czech-speaking friend to help you out.
If this is your first year in the Czech Republic, it is often recommended to let your employer deal with your taxes or hire a professional. The tax form is only available in Czech, and many of the resources that could help you fill it out are also in Czech. So unless you’re moving here with prior knowledge of the language, you might want to seek help.
