New reporting obligation in January 2022: do not forget to report income paid abroad
In accordance with § 38da of Czech Income Tax Act, individuals as well as corporate entities are obliged to report income paid abroad from Czech sources provided that income is subject to withholding tax. Please note that the reporting obligation is applicable also in cases when such income paid abroad is tax exempt or not taxed due to the application of relevant DTT.
However, there are the following exceptions from the reporting obligation provided that:
- the total amount of the same type of income (which is tax exempt or not taxed under the relevant DTT) to the same non-resident recipient does not exceed CZK 300,000 in a calendar month; or
- income is to be reported to the Tax Administrator under the Act on International Cooperation in Tax Administration.
Further, the taxpayer may apply by the tax administrator for an exemption from the reporting duty which may be valid up to 5 years. On the contrary, breaching of the reporting obligation may by sanctioned with a penalty up to CZK 500,000.
To be complete, we would like to mention that the reporting of income that is taxed using withholding tax and paid abroad remain unchanged, i.e. it is reported on a monthly basis (with the deadline by the end of a calendar month which follows the calendar month in which the taxpayer was obliged to withhold the tax).
Are you not sure whether you are required to report income paid abroad with the deadline by 31 January 2022, or which payments fall within the scope of reporting duty? Please do not hesitate to contact us, we will be pleased to assist you with this matter.
