The fundamental tax obligation for self-employed individuals (SMEs) is to submit a tax return and summaries and pay tax and mandatory insurance within the legal deadline.
Non-submission of a tax return and failure to pay insurance is sanctioned. If the tax return is not submitted within the legal deadline, a fine is levied by the financial authority, which amounts to 0.05% of the assessed tax for each day of delay, but not more than 5% of the estimated tax and no more than CZK 300,000.
The vast majority of SMEs have a data box set up by law. The deadline for submitting a tax return electronically for 2022 is May 2. A fine for late tax return submission will not expire if it is less than CZK 1,000. Moreover, there is a five-day “tolerance” period from the tax deadline, during which a tax return can be filed without penalty.
Income tax must be paid appropriately within the deadline for submitting a tax return, and the date of payment is considered to be the day when the appropriate amount is credited to the account of the tax office.
If this does not happen, the taxpayer is charged late payment interest. “Late payment interest is calculated from the fourth day after the due date, so a three-day tolerance period is legally set for tax payment,” warns Gabriela Ivanco of the consulting firm Mazars.
She added that the interest rate for late payment interest is the Czech National Bank’s repo rate applicable on the 1st day of the relevant half-year plus eight percentage points. The interest rate for late payment interest reaches 15%, significantly increasing penalties for late tax payments.
What are the penalties for failure to submit summaries?
SMEs submit tax returns and summaries for social administration and health insurance, which must be submitted within one month of the deadline for submitting tax returns.
Entrepreneurs can be fined up to CZK 50,000 for failing to meet this obligation.
The relevant institutions collect the imposed fines as diligently as the actual debt on insurance and penalties. When determining the fine, the payer’s history is taken into account. “Any shortfall in social and health insurance must be paid within eight days of submitting the summary,” specifies the tax advisor.