Czech Republic: Tax returns of non-residents

The Ministry of Finance has recently published an announcement on their web site regarding the application of the provisions of an amendment to the Income Tax which enables tax non-residents to file a tax return in the Czech Republic reflecting expenses related to selected income.
The most significant items of this announcement are the following: tax returns can newly be filed for tax periods starting in 2009. The new treatment applies to selected individuals and legal entities, that is to say Czech non-residents for tax purposes. Such individuals/entities must be tax residents of other EU states or states of the European Economic Area (Island, Norway, Liechtenstein).
The provisions are applicable to income from the provision of services, income from a trade or profession (other than employment income), and income from personal activities carried out in the Czech Republic, regardless of whether only one of the aforementioned types of income or a combination of types of income is earned.
The taxpayer can deduct either the actual amount of expenses or a percentage of the relevant income, unless such treatment is ruled out by the amendment. The generally applicable rule is that prove has to be given that expenditures and/or expenses had to be incurred in order to generate, ensure and maintain the income. According to the amendment, rather than keeping records an individual can choose to claim a percentage of the expenses.
Tax returns have be filed no later than within three months from the end of the tax period, or within six months if the tax return is prepared and filed by a tax advisor. In that case, however, a power of attorney issued for the tax advisor must be submitted to the relevant tax office within the initial three-month deadline.
Tax returns have to be submitted to the relevant tax office using the form issued by the Ministry of Finance. Although the Ministry of Finance’s web sites provide an English translation of the form, only the Czech version of the filed tax return is considered valid. The tax return can also be filed electronically. If the tax payer does not file the tax return within the tax assessment period, the withheld and paid tax is subsequently treated as having been assessed and settled.

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