EU citizens have the right to move and reside freely within the EU member states. Although they do not need a work permit, they may need (without obligation) a temporary residence permit if they stay in the Czech Republic for more than 3 months. When employing EU citizens, the employer is obliged to provide the following information:
\n– Inform in writing the competent regional branch of the Czech Labor Office regarding the entry of an EU citizen or their family member.
\n– This must be fulfilled by the employer no later than the day on which the employment or work within the framework of detachment begins.
\n– In case of termination of employment or detachment, the employer is obliged to inform the branch about the termination of employment or detachment within a maximum of 10 calendar days.
\n– Upon the renewal of an employment contract, the employee must be reported again.
\n– If the contract is for an indefinite period, the termination must be reported.
\n– The employer risks a fine of up to 100,000 CZK for non-compliance with the obligation to provide information.<\/p>\n
The Employment Law does not grant non-EU citizens the same rights as Czech Republic citizens. They must obtain a residence permit and a work permit.
\nTo be hired, a foreign citizen must possess:
\n– A work permit (for work lasting less than 3 months)
\n– An employment card (for a period longer than 3 months) – which also serves as a residence permit.
\n– A blue card (for a period longer than 3 months, with university education) – which also serves as a residence permit.
\n– An intra-corporate transfer card (ICT) (for stays longer than 3 months).<\/p>\n
However, in some specific cases, it is not necessary to have a work permit.<\/p>\n
As for employing EU citizens, employers have almost the same obligations, except that the employer is required to keep copies of documents proving the foreigners’ right to stay for the entire duration of the employment and for a period of 3 years after cessation, including translations into the Czech language.<\/p>\n
An employee is required to submit a personal income tax return in the Czech Republic if their taxable income exceeds 15,000 CZK during a calendar year. However, if they only have income from employment and no other income exceeding 6,000 CZK or 30,000 CZK from occasional activities
\nduring the year, they can request the employer to perform an annual tax reconciliation on their behalf by February 15.
\nThe income tax return must be submitted usually by April 1 (on paper) or May 1 (electronically) of the following year after the tax period, or by July 1 if the income tax return is filed by a tax advisor based on a power of attorney. The filing deadline can be extended by an additional 3 months or until November 1 in the case of foreign income.<\/p>\n
Avoiding double taxation
\nIn cases where an applicable convention allows the application of the double taxation elimination method, the employee can apply the exemption method based on local legislation if it is more advantageous, but assuming that the income from work has already been taxed in the contracting state, and the employer is a resident in the contracting state, or the income is borne by their permanent establishment located in the contracting state. In the case of the exemption method, a simple confirmation of income or a copy of the foreign personal income tax return is accepted.
\nIf no convention against double taxation is applicable, taxes paid abroad can be deducted from the income from work.<\/p>\n
Tax benefits and other specifics
\nA Czech tax resident has the opportunity to claim all the tax benefits listed above if the conditions are met. Assuming that the employee has only one employer for whom they also work in another country, the income is taxed in each country based on the relative number of working days. This can also apply to paid leave (granted for a calendar year), holidays, sick leave, bonuses, etc. In the tax return, the employee reports their total income, including foreign income that is exempt from taxation in the Czech Republic.<\/p>\n
Submission of personal income tax return
\nIf the employer’s headquarters is in the Czech Republic, the employer is obligated to declare and pay taxes monthly. This obligation also applies if they are registered in another EU member state, but their branch or permanent establishment is located in the Czech Republic or they have an employee working in the Czech Republic.
\nIn general, the submission of the income tax return is the personal responsibility of the employees, and the employer cannot file the income tax return on their behalf.
\nEmployees are required to submit an income tax return mainly in the following cases, regardless of their residence:
\n– They have different types of income.
\n– They have income from multiple employments.
\n– Their income is related to previous tax periods.
\nNon-Czech tax residents can submit an income tax return if they wish to claim other tax benefits; the only requirement is that they must have more than 90% of their total taxable income in the Czech Republic. The employer can make an annual reconciliation of salary taxes provided that the employee is not obliged to submit a personal income tax return.
\nThe income tax return must be submitted usually by April 1 of the following year after the tax period, or by May 1 if the employee has a data box, and by July 1 if the income tax return is filed by a tax advisor. Therefore, the filing deadline can be extended by an additional 3 months or until November 1 in the case of foreign income.<\/p>\n
Tax benefits and other specifics
\nThe right to tax benefits is subject to the condition of having at least 90% of the total income from sources in the Czech Republic. Depending on the tax benefits, it may be necessary to provide evidence or documentation to the tax authorities along with the income tax return.
\nIn cases where there is only one employer, and the employee also works for them in another country, the income is attributed based on the proportion of working days. This may apply specifically to paid leave (granted for the calendar year), national holidays, sick leave, bonuses, and benefits.<\/p>\n
Criminal offenses
\nTax evasion can be punished with imprisonment from 2 to 10 years, depending on the severity of the offense.
\nThe Czech Criminal Code does not specifically regulate reporting, although intentionally misleading reporting may be considered an attempt to commit a criminal offense.
\nThe concept of “effective repentance” applies to subsequent reporting or payment of due taxes, social security contributions, or health insurance. In that case, the criminal offense of tax evasion ceases if the author fulfills additional obligations before a court ruling is pronounced.<\/p>\n
Sources: https:\/\/accace.cz\/<\/p>\n
Image source: https:\/\/pixabay.com\/<\/p>\n
Graphics source: https:\/\/storyset.com\/<\/p>\n","protected":false},"excerpt":{"rendered":"
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