The notification duty for tax-exempt income means that taxpayers who in 2018 received tax-exempt income in excess of CZK 5 million must notify the finance office hereof.
Since 1 January 2015, taxpayers have been burdened with yet another duty: that of having to notify the authorities of tax-exempt income. Taxpayers who in 2018 received tax-exempt income must therefore report the following data to the finance office:
Amount of income pursuant to Sec. 4, Sec. 4a, Sec. 6 and Sec. 10 of the Income Tax Act (except for income which the authorities should be able to identify themselves from publicly accessible registers and records), and all income above the amount of CZK 5,000,000;
Reference to the provision in law according to which the income is exempt from tax, such as Sec. 4 and Sec. 4a, Sec. 6 and Sec. 10 of the Income Tax Act;
Description of the circumstances under which the income was attained (sale of one’s home, lottery winnings, etc.)
Date on which the income originated (whereas in the case of an inheritance, this is the date of final force of the decision whereby the inheritance court issued the inheritance certificate).
The above notification duty must be fulfilled no later than by the last day of the time period for filing one’s tax return for the assessment period in which tax-exempt income was attained, i.e., under the current circumstances, 1 April 2019. Those who have given power of attorney to a tax advisor commissioned with filing the tax return on their behalf may notify their tax-exempt income within the extended time period as per Sec. 136 (2) of the General Fiscal Code, i.e., by 1 July 2019.
As there exists no mandatory pre-printed form for notifying tax-exempt income, it is upon the taxpayer to choose how they wish to discharge this obligation. Notification may be done in writing, whereas the tax administration has put up an informal template on its online portal for this purpose: Oznámení o osvobozených příjmech podle § 38v ZDP (Notice of tax-exempt income within the meaning of Sec. 38v of the Income Tax Act), or orally (before a tax administration official, who will record the oral notification in a protocol), or electronically (by way of a message delivered to the databox of the finance office).
If a married couple attains tax-exempt income into their joint marital property, it is enough that one of the spouses report such income to the finance office.
Failure to report one’s tax-exempt income may result in the imposition of a fine pursuant to Sec. 38w (1) of the Income Tax Act. The authorities may decide to curtail or waive this fine if, taking into account the specific circumstances of the individual case, the reasons for which the duty to notify tax-exempt income was not observed are found to have been legitimate.
Income Tax Act (Act No. 586/1992 Coll.)