Personal income tax settlement for foreigners in the Czech Republic

Tax obligations of foreigners

Foreigners receiving income in the Czech republic could be obliged to submit annual tax returns to the Tax Authority. They are also entitled to take advantage of available tax reliefs and deductions.

Taxpayers obliged to settle PIT in the Czech Republic

Foreigners are obliged to submit personal income tax returns in the Czech Republic, who were, for example, in the position of:

employees employed by a foreign employer but performing their duties in the Czech Republic, if the employer did not withhold advance tax;
self-employed person;
persons receiving income from selected activities such as f.e. income from the use of immovable and movable property in the Czech Republic, income from independent activities carried out in the Czech Republic (provided that withholding tax has not been applied);
persons who have established a so-called permanent establishment within the meaning of the relevant tax regulations.

Although in some cases there is no obligation to submit a tax return, this method is often more advantageous for foreigners because it allows them to claim tax reliefs and deductions.

The way the tax return is prepared varies depending on the taxpayer's status and the type of income earned.

Tax reliefs

Foreigners who earn income and pay personal income tax in the Czech Republic can take advantage of available tax preferences, reliefs and deductions if they meet certain legal requirements. These reliefs are only claimed in the tax return submitted.

Examples of available tax reliefs:

basic tax credit per taxpayer;
the institution of income splitting per cooperating person for business income;
tax credit for dependent child;
tax credit for student, for disabled person, for pre-school fees;
deduction of donations (from the tax base).

How we can help?

Area	Scope of support
PIT returns	Preparation of PIT returns for: Persons employed in the Czech Republic and perfoming their work in the Czech Republic. Persons doing business in the Czech Republic and fulfilling their obligations on the basis of a contract for the provision of services, a contract for work, etc. Persons employed by foreign employers and performing work in the Czech Republic for whom the settlement of tax obligations in not carried out by the employer. The service includes: Analysis of the employee's tax residency based on Czech and international regulations. Analysis of the tax allowances and deductions to which an employee is entitled, with the preparation of detailed instructions for the correct settlement.
Additional services	Registration of an individual/employee as a taxpayer of personal income tax in the Czech Republic. Representation of the payer/taxpayer before the tax authorities. Obtaining a certificate of tax residency in the Czech Republic. Registration of foreign employers (without registered office in the Czech Republic) for the purpose of obtaining tax identification number and registration with all relevant institutions. Obtaining a debt-free certificate. Preparation of requests for individual tax interpretations in the form of e.g. binding assessments, requests for reduction of assessed tax advances, etc. Assistance in filling out tax returns.
Support for posted employees	Coordination of taxation in the posting and receiving countries. Coordination of social security on the basis of national and EU regulations, obtaining A1 certification. Preparation of the annual settlement calculation between the employee and the employer.
Support for employers posting employees	Analysis and advisory on tax planning opportunities related to the posting of an employee abroad. Planning of employee posting structures in the context of Czech and international law. Preparation of a sample cost calculation (hypothetical payroll) taking into account tax protection policies for posted employees.