Corporate income tax: how to register?
The establishment of a company also entails tax obligations. The first step in this area is to register the company for income tax. Learn how to do it and what else to look out for.
Basic facts about VAT
Corporate income tax (CIT) is compulsorily paid to the tax office by every legal entity doing business in the Czech Republic. Legislatively, CIT is enshrined in Act No. 586/1992 Coll. on Income Taxes. The tax rate is 19% (investment and pension funds are exempted).
The tax amount is then calculated on the tax base (i.e. the difference between taxable income and tax deductible expenses) less deductible items (e.g. previous tax losses) and items reducing the tax base (donations, etc.).
In the spring, you file your tax return for the previous year, in which you calculate the specific tax amount. You must pay it by the end of your tax filing period. During the year, you usually also pay advance payments of income tax. We discuss the details of deadlines and advances in later sections of this article.
Registering for corporation tax
Every new company must register for CGT with the local tax office within 15 days of its formation. This obligation applies only to legal entities with taxable income (i.e. not e.g. associations, JVUs, etc.). To register, there is a form called the Registration Application for Legal Entities, which you can fill in online in the MY Taxes portal.
In the registration document you fill in:
- identification and contact information about yourself and your company;
- information about your profitable activities;
- details of the company's organisational units;
- details of the bank account from which you will pay the tax (also used to send overpayments);
- your expected tax liability (i.e. how much you expect to pay in tax each year).
The tax administrator will then send you a decision on registration within 30 days, in which he will assign your company a tax identification number (TIN). This number is then used to communicate with the tax administration.
Attention! Simply registering for VAT does not make you a VAT payer - you only start paying VAT on the basis of compulsory or voluntary VAT registration, which is processed separately. For details, see the article on VAT payers.
Tax returns: what about deadlines?
Your annual obligations include filing a tax return. This is where you calculate the total amount of corporation tax you will subsequently pay to the tax office. It will also tell you how much tax you will have to pay in advance for the next tax year.
This document is submitted every spring, with the understanding that you are declaring income for the whole of the previous year (the exceptions are tax returns for company conversions, liquidations, etc.).
The filing deadline then depends on how you file the return:
- 1. 4. for paper returns (however, companies registered in the commercial register must file returns electronically via a data box);
- 1. 5. for electronic filing (e.g. data box or My Tax Portal);
- 1. 7. if the return is filed on your behalf by a tax advisor or attorney, or if your company is subject to a mandatory audit.
However, the dates may shift due to weekends or decisions of the state authorities, so we recommend checking the current dates on the tax administration's website every year.
Remember that you must also pay the tax assessed by the filing deadline. The authorities take into account the date on which the payment is credited to your account. We would add that if you file your return electronically before 1 April, the deadline for paying the tax will be postponed until 1 April, even though it was filed electronically.
TIP: Don't forget that if your business is incorporated, you must also publish your financial statements on time.
Advances on DPPO
If you have paid more than CZK 30,000 in income tax in the last year, you will not be able to avoid another obligation - paying regular DPPO advances.
Their amount is always calculated as a certain percentage of the last calculated annual tax. You should then send the advances to the tax office by the 15th day of the month (according to the table below). The tax return then compares the calculated annual tax with the amount of the advances paid. You will then pay any underpayment - the tax authority will refund any overpayment.
The exception is the first year of business, during which you do not make any advance payments and pay the tax at once in the tax return.
|Amount of income tax for the previous year||Amount of one advance payment||Frequency of advance payments|
|up to CZK 30 000||No advance payments||you do not pay advances|
|30 001-150 000 CZK||40 %||2x per year (June and December)|
|over CZK 150 000||25 %||4 times a year (March, June, September, December)|
Are your taxes making your head spin? Let us advise you!
Navigating the Czech tax system is not easy. As an entrepreneur, you often have completely different concerns. So put your tax administration in the hands of experts. Our accounting team will prepare the necessary documents for you and will see to it that all obligations are fulfilled. We are also happy to provide complete bookkeeping for your company - just leave us a short message and our specialists will get back to you.