Payroll Tax Reconciliation
The Annual Tax Reconciliation (“ATR” or “Roční zúčtování daně” in Czech) is a simplified reconciliation of payroll taxes withheld by the employer from the employee’s salary throughout the year. It happens only internally at the employer’s and no documents on behalf of the employee are filed with the tax office.
Who Is Eligible to the ATR?
The ATR for 2024 shall be made by the employer for an employee who:
- Signed a Declaration of the personal income taxpayer with the employer, the so-called pink form, “Prohlášení poplatníka daně z příjmů fyzických osob ze závislé činnosti” in Czech
- Is not obliged to file a personal income tax return
- Applies until 15 February 2025 for the 2024 ATR, signs “Žádost o roční zúčtování záloh a daňového zvýhodnění” in Czech (see picture above)
What Has To Be Enclosed to the ATR Application?
You should submit the following attachments to the application for the ATR:
- Confirmation of taxable income from all your previous employers where you were employed in 2024, or information on your activities until joining your last employer, e.g. proof of registration at the labour office
- Documents proving entitlement to the relevant tax deductions or tax base deductions
Annual Tax Return
Who Is Obliged to File a Tax Return?
Employees are obliged to file their own personal income tax return especially when:
- They had employment income from multiple employers at the same time (and it was subject to advance tax, not final withholding tax), or
- They had other income higher than CZK 20,000 that is not exempt from tax or subject to the final withholding tax, e.g. self-employment, rental, some capital income or other income
In general everyone whose annual income exceeded CZK 50,000 should file a personal income tax return, but employees having only one employment income can generally apply for the ATR instead of filing a tax return on their own.
From our experience the biggest problem with the ATR is that you then cannot obtain a confirmation of tax paid from the tax office. Such confirmation may be necessary for a foreign tax office as a proof that you have been paying taxes in the Czech Republic. And this is not possible as (with ATR done internally by your employer) the tax office basically does not have any information about you at all.