Czech Republic: Taxes - determining specific terms

What is the difference between gross and net income, who is the resident and the meaning of the overpaid taxes - more about specific terms in this article. Simple answers to complicated questions.

Income

One of the most important questions while searching for a job is how much will I earn? Mostly you see a higher monthly payment mentioned in the job description. So after the first salary you realize that you have earned less than expected. There is an answer - the employer mentioned your gross income, but you received a net income.

Gross income (hrubá mzda) - this is the total amount that an employee earns before deducting a tax or other fees (e.g. Social insurance).

Net income (čistá mzda) - this is the amount that an employee receives after the employer deducts all the taxes.

Payments

For sending a payment you may need to add additional information to transfer money. Mostly, those symbols are needed for easier identification of the payer or the purpose of payment. What else do you need to mention except for the amount and a bank account?

Variable symbol (variabilní symbol) - commonly used to identify payments in Czech Republic. This symbol consists of up to 10 numbers.

Constant symbol (konstantní symbol) - is used to clarify the type of the payment. This symbol is needed primarily for government payments.

Tax declaration

Main phrases you may need while filing a tax declaration:

Tax declaration (daňové přiznání) - type of the document, where you provide income information to tax authorities, usually at the end of the tax year.

Personal income tax (DPFO - daň z příjmu fyzických osob) - tax levied on salaries, dividends or other income earned through the year.

Tax period (zdaňovací období) - you need to pay taxes from your income only for a specific period. Usually tax year is the same as a calendar year.

Withheld tax (záloha na daň) - tax is deducted by the employer in advance and paid directly to the government. Each year you need to file a tax return to receive overpaid taxes or pay debts.

Need to know

Resident (resident) - individual who lived in the country more than 183 days during a calendar year. Residents are allowed to apply for tax allowances, which you can mention while filling a tax return.

TIN (VČP/rodné čislo) - personal identification number which is used in several areas, including tax area while contacting a tax office or filing any documents.

You can always ask our advisor for a consultation if you have any questions.