Taxation of Individuals Practical tips & hints. Robert Bezecný, Lucie Rytířová 17 February 2015

Transcription

1 Taxation of Individuals Practical tips & hints Robert Bezecný, Lucie Rytířová 17 February 2015

2 Content I. Why Me? (Tax Residency Determination) II. What Income? (Employment / Self-Employment / Capital / Rental) III. Me or My Employer? (Tax Return vs Annual Reconciliation) IV. Can I Save? (Tax-Deductible Items, Tax Allowances) V. What About My Social & Health Insurance? 2 Taxation of Individuals

3 I. Why Me?

4 Tax Resident An individual residing or usually staying in the Czech Republic in the calendar year Residence the place where the taxpayer has a permanent home under circumstances that indicate his/her intention to stay there permanently Length of stay he/she usually stays in the Czech Republic for at least 183 days Taxation of worldwide income in the Czech Republic x Tax Non-Resident: taxable in the Czech Republic only on income from Czech sources Split residency possible 4 Taxation of Individuals

5 Tax Resident in More Countries Tax residency in more countries Double Tax Treaty to decide (Article 4) Permanent home Centre of vital interest Habitual residence Nationality Agreement of both states 5 Taxation of Individuals

6 II. What Income?

7 Individual s Income Section Lump-sum Expenses Tax Loss Offset of Tax Loss Employment Income 6 N/A No No Self-Employment Income 7 80 / 60 / 40 / 30 % Yes Yes Rental Income 8 30 % Yes Yes Capital Income 9 N/A No Yes Other Income 10 Only Actual Expenses No Yes 7 Taxation of Individuals

8 Employment Income Current and previous employment and similar relationship Executives, members of board, limited partners Any income received in relation to the current, future or prior performance of dependent activity, regardless of the payer of such income Priority against other types of income Taxed monthly via payroll Super-gross salary Incl. employee s stock option plans 8 Taxation of Individuals

9 Self-Employment Income Income from agriculture, forestry and water management Income from entrepreneurship (based on a trade licence) Freelancers and other businesses Income of authors (withholding tax if up to CZK 10,000 per month) Income of general partners and partners in an unlimited partnership Type of Income Lump-sum Expenses Agriculture 80 % Handicrafts (up to CZK 2,000,000 as of 2015) 80 % Businesses other than handicrafts (up to CZK 2,000, % as of 2015) Freelancers (up to CZK 2,000,000) 40 % Rent of business property (up to CZK 2,000,000) 30 % 9 Taxation of Individuals

10 Capital Income Profit shares (dividends) Shares of a silent partner Interest income No deduction of expenses 10 Taxation of Individuals

11 Rental Income Actual or lump-sum expenses (30 %, up to CZK 2,000,000) Other income Only actual expenses Income from occasional activities, sale of property, prizes from lotteries etc. 11 Taxation of Individuals

12 III. Me or My Employer?

13 Employer Annual Tax Reconciliation Only employment income from one employer (or more consecutive employers), plus up to CZK 6,000 of other income Czech tax resident (or Czech tax non-resident not claiming any tax deductions or allowances) Income not exceeding CZK 1,245,216 per year Signature of a Tax Reconciliation Confirmation before 15 February 2015 Tax refund through the payroll 13 Taxation of Individuals

14 Employee Annual Tax Return Until 1 April 2015 (or 1 July / 1 October / 1 November 2015) Total income & tax deductions & tax allowances Tax underpayment to be settled by the tax filing deadline / tax refund from the tax authority within 30 days after the tax filing deadline 14 Taxation of Individuals

15 Income Tax Pre-Payments Based on the last tax liability From the filing deadline until the next tax filing Tax Liability (CZK) Pre-Payment Rate Pre-Payment Frequency 0 30,000 0 N/A 30, ,000 40% of the tax Semi-annually 150,001 25% of the tax Quarterly 15 Taxation of Individuals

16 IV. Can I Save?

17 Tax Deductions Charitable donations (incl. blood donation) min. CZK 1,000, up to 15 % of the tax base Mortgage interest to finance primary housing up to CZK 300,000 Private pension or life insurance up to CZK 12,000 Trade union fees Certification of additional education (Act 179/2006 Coll.) 17 Taxation of Individuals

18 Tax Allowances Tax Allowance Annual Tax Relief Amount (Monthly Amount) Basic allowance CZK 24,840 (CZK 2,070) Spouse tax allowance CZK 24,840 (monthly not possible) Child tax allowance CZK 13,404 (CZK 1,117) Disability tax allowance (level I and II) CZK 2,520 (CZK 210) Disability tax allowance (level III) CZK 5,040 (CZK 420) Severe disability tax allowance CZK 16,140 (CZK 1,345) (ZTP-P card holders) Student tax allowance CZK 4,020 (CZK 335) 18 Taxation of Individuals

19 Spouse Tax Allowance Spouse s own income less than CZK 68,000 per year Only for married couples (or registered partners) Wedding during the year: from the next month Czech tax non-residents only if > 90% of income from CZ Child Tax Allowance Up to 18 years or students up to 26 years Czech tax non-residents only if > 90% of income from CZ 19 Taxation of Individuals

20 V. Social Security and Health Insurance

21 What is Decisive? EU/EEA regulations International treaties (totalisation agreements) Local legal regulations 21 Taxation of Individuals

22 Contributions Employees Assessment base = tax base of the employee Rates Social security (capped at CZK 1,277,328 for 2015) Employee 6.5 % Employer 25 % Health insurance (no cap) Employee 4.5 % Employer 9 % Private entrepreneurs Assessment base = 50 % of tax base Rates Social security (capped at CZK 1,277,328 for 2015): 29.2 % Health insurance (no cap): 13.5 % 22 Taxation of Individuals

23 VI. Any Questions?

24 Your contacts at Deloitte ROBERT BEZECNÝ Manager LUCIE RYTÍŘOVÁ Manager Taxation of Individuals

25 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.