What not to forget in taxes, even in these difficult times!

Income tax returns and related deadlines

As regards personal and corporate income tax returns, many of us keep in minds deadline of 1 April as the annual deadline for their submission. However, the deadlines differ based on the form of submission (paper or electronic) and also in the case when the tax return is submitted by the tax advisor. In our summary below, we will describe all possible cases and related deadlines for submission as well as the resulting deadlines for payment of any eventual tax liability in order to avoid unnecessary sanctions.

What is the deadline for submission of the income tax return?

The basic deadline for submission of the corporate as well as personal income tax return is standardly three months after the end of the relevant tax period, i.e. in case of tax returns for the calendar year 2021, the deadline expires on 1 April 2022. However, if tax return is submitted electronically, this deadline is ex lege extended by one month, i.e. until 2 May 2022. It is also worth mentioning that for those entities that have a data box established by law, electronic submission of tax returns is an obligation. Otherwise, the tax subject is obliged to pay a fine of CZK 1,000.

If the taxpayer does not meet even the May deadline for submitting the tax return electronically, there is still the possibility to avoid possible sanctions. The last deadline for submission of the tax return is 1 July 2022, namely for those taxpayers who use the services of a tax advisor or attorney. At the same time, this term also applies to those taxpayers who are required to have their financial statements verified by an auditor.

The tax return can thus be submitted in the following ways:

• in paper form by standard mail (Czech Post) to the address of the relevant financial office;
• in paper form personally at the submission desk of the relevant financial office; or
• electronically in xml format via a data box or via the web portal called “MOJE daně”.

By when and how must the tax be paid?

If the taxpayer declares an obligation to pay tax on the basis of the prepared return, the payment of tax underpayment must be credited to the account of the relevant financial office no later than as of the deadline for submission of the relevant tax return. This means until 1 April 2022 in case of submission in paper form, 2 May 2022 in the case of submission in electronic form and by 1 July 2022 in the case of submitting the tax return by a tax advisor or an attorney based on the power of attorney.

The arrears can be paid in the following ways:

• in cash at the financial office or at a branch of the Czech National Bank;
• by bank transfer to the account of the financial office; or
• via so called postal order of type "A".

And what if it is not managed in time?

In case of late payment of the tax, sanctions in the form of late payment interests are imposed and start to be calculated from the fourth day after the due date (e.g. as of 5 April, if the due date is 1 April). The amount of these sanctions is set at the repo rate of the Czech National Bank (4.5% this year) increased by 8 percentage points. However, if the total amount of sanctions does not reach CZK 1,000 for one tax period, it will not be imposed by the tax administrator.

On the other hand, should the taxpayer declare a tax overpayment that is higher than CZK 200, the tax administrator will recover this overpayment to the specified account within 30 days, based on the taxpayer's request (for individuals, this request is part of the tax return).

If it happens that for some reason you do not submit the tax return in time, it is possible to file it within 5 working days after the deadline without any sanctions. However, once this five-day impunity period is missed, the tax administrator will impose a penalty for late submission of the tax return.

More information on sanctions can be found in this article.

As regards the amount of sanctions, it also depends on the date by which the taxpayer was obliged to submit their tax return as well as the form in which the tax return was actually submitted.

If a taxpayer submitted the tax return in paper form in August 2022, the penalty is calculated from April 2022, given that this was the due date for submission of the tax return in paper form. In case of electronic submission, the calculation of sanctions would start from May 2022, and if the tax return was submitted with assistance of a tax advisor, the sanctions would be imposed only from July 2022.

If you are not able to manage to prepare and submit your tax return within the proper deadline in April or May or should you need an advice and you would like to use the services of a tax advisor, do not hesitate to contact us, we will be happy to help you with preparation of your tax return.

Extraordinary measures in response to the Russian invasion of Ukraine and the so-called Lex Ukraine

The armed conflict in Ukraine, is caused by the invasion of Russian troops, which has been going on for more than a month now, has also had consequences here in the Czech Republic, in particular a significant increase in fuel prices. As of 24 March 2022, a decision of the Minister of Finance to pardon tax accessories and tax advances due to an emergency situation has been published the in the Financial Bulletin.

On its basis, road tax advances payable on 19 April 2022, 15 July 2022, 17 October 2022 and 15 December 2022 are waived for all road taxpayers without the need to take any action towards the tax administrator. The pardon of the road tax advance payments does not mean waiver of the road tax itself. In this regard, it is also necessary to mention that an amendment to the Road Tax Act is currently being prepared, which should lead to a significant reduction of persons subject to this tax, and at the same time to a significant reduction of this tax. The change should be applied retrospectively for the tax period of 2022.

At the same time, late payment interests on value added tax for the tax periods falling within February to August 2022 are also pardoned for those whose predominant part of their income comes from the transportation business, provided that this fact is duly notified to the tax administrator and at the same time, the corresponding tax will be paid by 31 October 2022 at the latest.

Further in this respect, so called Lex Ukraine, consisting in three various legal norms, has entered into force as of 21 March 2022. These laws are aimed to simplify the stay of Ukrainian refugees in the Czech Republic as well as facilitating their employment. The validity period of the acts is currently set up to 31 March 2023.

A list of these acts can be found under the following links (only in Czech):

• Act No. 65/2022 Coll., on certain measures in connection with the armed conflict on the territory of Ukraine caused by the invasion of the Russian Federation troops;
• Act No. 66/2022 Coll., on measures in the field of employment and social security in connection with the armed conflict in the territory of Ukraine caused by the invasion of the Russian Federation troops;
• Act No. 67/2022 Coll., on measures in the field of education in connection with the armed conflict in the territory of Ukraine caused by the invasion of the Russian Federation troops.

Act No. 65/2022 Coll.

• Establishes the conditions for granting temporary protection to foreigners (analogy to visas for stay over 90 days for the purpose of tolerating a stay in the territory of the Czech Republic, unless stated otherwise).
• Sets out special rules for the provision of health services. A foreigner who has been granted temporary protection becomes an insured person, even if the health service is provided up to 30 days before the temporary protection is granted. A child born in the territory of the Czech Republic to such a foreigner also becomes an insured person, however for a maximum period of 60 days from the date of birth.

Act No. 66/2022 Coll.

• In the field of employment, a foreigner with temporary protection is considered to be a foreigner with a permanent residence permit.
• In the field of social security law, it regulates the possibility of placing children in children's groups, even if the founder of the group is not the employer of the child's parent. If the child is not in the custody of the parents or another person to whom custody has been entrusted, a person to whom custody has been entrusted by the parent and who provides an affidavit can also be considered a parent for these purposes. For a period of 6 months, contribution to operation of such playgroup is not claimed. A foreigner may also carry out childcare activities if the statutory conditions are met.
• Payment of a humanitarian benefit in the amount of CZK 5,000 is defined, which is payable by the Labour Office of the Czech Republic. If the income, social and property conditions of a foreigner with temporary protection are not sufficient for the provision of basic living needs, this benefit may be provided repeatedly, however for a maximum period of 6 months in total.
• It defines the solidarity household allowance for an individual who provides accommodation free of charge to a foreigner with temporary protection. This allowance is granted based on an application and its amount is set by government regulation (currently it amounts CZK 3 000 per accommodated person, with a maximum of CZK 12 000 for the entire household).

Act No. 67/2022 Coll.

• Establishes the conditions for the admission of refugee pupils and students from Ukraine to schools.
• Allows for the employment of teaching staff who do not meet the proof of knowledge of the Czech language, exclusively for work with foreigners and on a fixed-term basis. This part of the act expires on 31 August 2022.