Obligation to report tax-exempt income exceeding CZK 5 million
Did you receive any income higher than CZK 5 million, which is exempt from personal income tax in 2015?
In that case you should be aware of the reporting obligation, which has arisen to you towards the tax authority.
Starting from 2015 tax period all individual taxpayers are required to report every income higher than 5 000 000 CZK, which is exempt from personal income tax to the Czech tax authorities.
From the practical point of view the taxpayers will firstly notice this obligation in 2016 as the deadline for reporting is the same as the deadline for filing of personal income tax return (i.e. 1 April 2016 or 1 July 2016 in case of filing the tax return by a certified Czech tax advisor).
What types of income should be reported?
The obligation applies on any income, which is not included in the personal income tax return due to its exemption from tax, based on the provisions of the Income Tax Act, if the information on the income is not available from the publicly accessible sources.
These could be for example:
- Income from sale of real estate
- Income from sale of movable property
- Received insurance compensation
- Income from sale of securities
- Income from heritage
- Winning from lotteries and betting
It is necessary to report every single income exceeding the limit of CZK 5 million.
What information should be reported?
Following information should be stated in the declaration:
- Amount of income received
- Description of the circumstances under which the income was received
- Date when the income arose
The reporting can be done through a recommended form or in some other way.
In case of failure to comply with reporting obligation in the stated deadline you can be penalized up to amount of:
- 0.1% of the amount of unannounced income, if the obligation is fulfilled additionally without an appeal of the tax authorities;
- 10% of the amount of unannounced income, if the obligation is fulfilled additionally based on an appeal of the tax authorities;
- 15% of the amount of unannounced income, if the obligation is not fulfilled at all.
Considering the circumstances the penalty can be partially or fully waived by the tax authorities.
Should you wish to receive more information about this topic or we can assist you with the reporting obligation, please do not hesitate to contact us.