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Do You Know Your Income Tax Prepayments?

Czech Republic: The amount and frequency of income tax prepayments differ from taxpayer to taxpayer.

Depending on previous tax returns filed, tax payers may become obliged to make tax prepayments during the year (or their existing obligation to make such prepayments may change). Both for legal entities and natural persons, the amount and periodicity of income tax prepayments follow from the last known and established tax burden:

1. Taxpayers whose tax duty was higher than CZK 150,000 shall pay quarterly tax prepayments in the amount of 1/4 of their most recent known tax duty. These are due as of the 15th day of the last month of each calendar quarter (i.e., by 15 March, 15 June, 15 September, and 15 December, respectively). The first tax prepayment in the newly determined amount is due on the nearest due date after the deadline for filing one's tax return has passed. I.e., if the date for filing the tax return for 2016 was on 3 April 2017, then the first quarterly tax prepayment whose amount is based on the tax duty for 2016 must be paid by 15 June 2017.

2. Taxpayers whose tax duty was higher than CZK 30,000 but did not exceed CZK 150,000 shall pay semiannual tax prepayments, each in the amount of 40% of the most recent known tax duty. The first prepayment must be made by the 15th day of the sixth month of the assessment period, and the second one by the 15th day of the twelfth month of the assessment period. Again, the first prepayment in the new amount is due for payment on the nearest due date after the deadline for filing the income tax return.

3. Taxpayers whose last known tax duty did not exceed CZK 30,000 are not obliged to pay any tax prepayments. Municipalities and regions are also not required to make income tax prepayments, and none must be made on behalf of testators after the day on which they died. Further, taxpayers who no longer pursue the occupation from which they derived taxable income (or whose source of taxable income has ceased to exist) need not pay income tax prepayments either; however, the taxpayer must in each case provide the authorities with evidence of the underlying facts.

Income tax prepayments are rounded up to the nearest whole one hundred crowns. Taxpayers who are obliged under the law to make income tax prepayments may ask their finance office for a reduction of the amount of these prepayments, or for relief from the duty to make them altogether. Any such request ought to specify the concrete reasons and contain documentary evidence for the claims made by the taxpayer. The request should be submitted before the tax prepayment falls due which the taxpayer wishes to see reduced or deferred. This request may be made free of any administrative fee.

As for employees in a labor-law relationship, their employer will make monthly wage tax prepayments each calendar month, withholding the relevant amount from their wages or salaries throughout the year. It is not uncommon for cases to occur in practice in which a taxpayer has income both from dependent gainful employment (i.e., draws a salary or wage) and from other sources (e.g. from independent business pursuits). The tax prepayments of such a taxpayer (not including the wage tax prepayments, which are withheld by the employer as a matter of course) will then be determined based on the "partial assessment base for wage tax". If the latter represents less than 15% of the overall assessment base, then the taxpayer must make prepayments from the entire assessment base in the full amount. If the partial assessment base for wage tax is 15% to 50% of the overall assessment base, then the taxpayer must make semiannual prepayments (but only half the regular amount). If the partial assessment base for wage tax makes up more than 50% of the total assessment base, then the taxpayer need not make any prepayments (other than the wage tax prepayments withheld by the employer).

Source: Income Tax Act (Act No. 586/1992 Coll.)