If you acquired at least one property last year, or something about your properties changed, you need to file a property tax return by the end of January. This rather special tax return applies to everyone who became the owner of land, a house or a residential or non-residential unit in 2022. The property tax return differs from many other taxes in one essential respect: It is filed “in advance”, i.e. for 2023, based on the situation as it stands on New Year's Day (1 January 2023). What matters is the legal effect of the entry (or deletion of a record) in the Land Registry. Likewise, everyone who gifted, sold or otherwise disposed of a property, must report this to the state by filing a new tax return, by 31 January 2022. Property tax is not collected centrally by the state, but through the regional tax offices. You must therefore file a return for each region in which your properties are located. The Tax Administration allows returns to be filed via the MojeDaně.cz portal, which can be accessed using the so-called Citizen's Identity – for example through your internet banking login details. Beware: initial registration for the “Tax Information Mailbox plus” (DIS+) can take the system up to 48 hours to process, so it is important not to leave filing your return until the last days of January if you are accessing the system for the very first time. Taxpayers who filed a return in previous years and for whom nothing relevant to determining the tax has changed do not need to file anything and, as every year, will receive payment slips from the regional tax offices, or messages in their data mailbox. The tax assessed may differ depending on the coefficient, which each municipality sets individually. That means you may pay a different amount of tax for essentially identical buildings in different municipalities. The difference will usually be in the hundreds or low thousands of crowns; genuinely high property taxes are paid only by owners of shopping centres or, say, office complexes. Note that from this year Czech Post has decided to charge a fee for Type A payment slips. If you do not have access to DIS+ and want to avoid this fee, the best solution is to file a Request for property tax payment details to be sent by e-mail, or simply set up DIS+ access straight away. The Tax Administration will then communicate with you electronically regarding tax assessments, unless you expressly request a duplicate paper version in the settings. If the property you are to pay tax on has more than one owner, there are two ways to handle the situation. Either one person declares and pays the tax on behalf of all the co-owners, or each co-owner declares and pays their own share. Communication with the other co-owners is therefore important too. In the vast majority of ordinary cases, the taxpayer is the owner (or co-owners), and exceptionally the builder, user, tenant or so-called leaseholder in the case of agricultural land. Care is also needed with properties held as business assets, which must be declared as properties used for business. A specific situation may arise with so-called studios, in which many people effectively live, even though the properties are not approved for long-term housing. Taxpayers have until 31 May 2023 to pay the tax. If the amount assessed is higher than 5,000 Kč, it is paid in two identical instalments by the end of May and the end of November.
Income tax for last year
Property tax is of course not the only tax you have to pay this year. Anyone renting out at least one property will have to include this income in their personal income tax return. The only exception applies if you are an employee and earn less than 6,000 Kč a year from renting. In that case you do not have to deal with a return and you pay no income tax. The tax return states “net” rental income. Do not include any payments for energy and services that you collect from tenants. Remember to deduct expenses – either by adding up your actual expenses (for which you must keep receipts for at least 3 years), or using the 30% flat-rate deduction (up to a maximum of 300,000 Kč). You then pay 15% tax on the resulting tax base (watch out for the progressive rate, which may apply to you if your income exceeds 48 times the average wage). The deadline for filing the income tax return and paying the tax for 2022 is 3 April 2023 for paper filing, while for electronic filing the deadline is extended to 2 May 2023. Taxpayers whose returns are filed by an authorised tax adviser or lawyer have until as late as 3 July 2023. But you certainly don't want to leave anything to the last minute!
Changes to the flat-rate tax
The situation is somewhat specific for the self-employed who have opted into the flat-rate tax regime (not to be confused with flat-rate expense deductions). This regime allows social insurance, health insurance and a symbolic amount of income tax to be paid in a single payment and frees you from having to submit income statements to three different institutions. What is more, the thresholds for entering the flat-rate tax regime have risen this year, so it may be attractive to more and more entrepreneurs; new this year are three separate bands depending on the level of income or theoretically claimed expenses. However, if you have rental income, you will not avoid filing a tax return anyway. So only two certainties remain in this world – taxes and death. That is what the writer and one of the “founding fathers” of modern America, Benjamin Franklin, quipped. Finding your way through the tax jungle is simply not easy, and even real old hands can get lost on the Tax Administration's tax portal. Do keep in mind that, working with experienced tax advisers, we can arrange your rental income tax return as an add-on to the Flat Service Partner and Flat Service Garant services.
