Understanding Tax Returns for Employees in Czech Republic

The responsibility of filing tax returns generally falls on the payroll department for most employees. However, those who work for multiple employers at the same time, employees demanding a withholding tax refund from a work agreement, or employees with other taxable incomes, such as from rent that exceeds the legal limit, are required to fill out and submit it themselves.

The annual tax settlement for 2023 could not be requested by employees from their employers. This is typically applicable for employees with income from business, rent, or other taxable incomes above 20,000 CZK for the previous year. This also includes employees who worked for at least one month for two employers simultaneously, and provisional income tax was deducted from both incomes.

Employees with income solely from dependent activities fill out a simplified two-page tax return. On the other hand, employees with an extra income from business, capital assets, or rent fill out a four-page tax return. A tax return is always required to be accompanied by all attachments, which typically are documents from financial institutions reducing the tax liability in the form of tax deductions, such as paid mortgage interest or deposits on pension savings.

Filling out a two-page tax return is relatively simple. However, the total gross salary from all employers, the taxpayer’s discount, and the total deducted advances must always be stated. Employees filling out a two-page tax return may be entitled to a tax overpayment, so it is necessary to also fill in the account number.

Employees earning extra income from business need to attach an annex number one to their four-page tax return, where the partial tax base is calculated according to § 7 of the Income Tax Act. In the case of extra income from rent or other taxable income, an annex number two must be attached to the four-page return.