Income tax advances in Czechia — who pays them, how much and when

An income tax advance is an interim payment through which you pay the tax spread across the year rather than in one go after filing your return. The state collects the tax as it accrues and you avoid a single large payment. After the year ends, the advances you have paid are set against the actual tax — if you paid more, the difference is refunded; if less, you pay the rest.

The key point is that advances are not set from an estimate of future profit but from your last known tax liability — the tax that came out of your most recently filed return. Its size decides whether you pay advances at all and, if so, whether twice or four times a year. The rules are the same for sole traders (individuals) and for limited companies (s.r.o.), and they are governed by § 38a of the Income Tax Act.

This overview explains who pays advances, in what amount and by which deadlines — and what to watch for so the payment does not catch you out.

What the advance is calculated from

The basis is your last known tax liability, i.e. the tax from your most recently filed return. It sets the so-called advance period — running from the first day after the deadline for filing last year's return to the last day of the deadline for filing the return in the following year. So it is not exactly a calendar year, but the span between two returns. Advances paid in this period are then credited in the next return.

By the size of the last known tax liability, taxpayers fall into three groups: those with tax up to CZK 30,000 pay no advances; those with tax above CZK 30,000 up to CZK 150,000 pay half-yearly advances; and those above CZK 150,000 pay quarterly advances. Each advance is rounded up to whole hundreds of crowns.

Who does not pay advances

The largest group are those whose last known tax liability did not exceed CZK 30,000. These taxpayers need pay nothing during the year and settle the whole tax in the return. For many smaller sole traders and small limited companies this means advances do not concern them at all.

Nor does anyone filing a return for the first time in the given year pay advances — for instance a newly founded s.r.o. or a sole trader in their first year of business. As long as no tax is known, there is nothing to calculate the advance from; the first return sets the amount of tax and advances only start afterwards, if at all. Advances are also not paid on the tax attributable to employment income, discussed below.

Half-yearly and quarterly advances

If your last known tax liability exceeded CZK 30,000 but was no higher than CZK 150,000, you pay half-yearly advances — twice a year at 40 % of the tax. They are due on 15 June and 15 December. Example: with tax of CZK 90,000 from the last return you pay two advances of CZK 36,000 each — one in June, one in December; the rest of the tax you settle only after filing the next return.

If the tax exceeded CZK 150,000, you move to quarterly advances — four times a year at 25 % of the tax, due on 15 March, 15 June, 15 September and 15 December. With tax of CZK 240,000 you thus pay four advances of CZK 60,000. If a due date falls on a weekend or public holiday, it moves to the next working day.

Employment alongside business

A special rule applies when, alongside your business, you also have employment income from which your employer already deducts tax advances on your wage. So that you do not pay the same tax twice, the share of employment in your total tax base is taken into account. If employment makes up at least half of the tax base, no advances from the business are paid at all. If it makes up 15 % to less than half, you pay advances at half the amount. Only when the share of employment is under 15 % do you pay advances in full.

In practice this rule exempts many people who run a business alongside a job — the tax on their main income is already paid as it accrues by the employer. How employment and business overlap for tax and contributions is covered in the article on the tax return and its deadlines.

How advances are settled and what to watch

Advances are not an extra tax on top — they are money paid up front towards the tax worked out in the return. When you file, you calculate the actual tax for the year and deduct the sum of advances paid in the advance period. You either pay the difference or you have an overpayment, which the tax office refunds on request. So it pays to pay advances on time and in the right amount — you avoid interest on late payment as well as a needless overpayment sitting in the state's account all year.

Note, too, that filing a new return changes the last known tax liability, and with it the amount of the following advances — they are recalculated from the next due date. In justified cases (a sharp drop in income, say) the tax office can, on request, reduce or cancel the advances. The wider picture of how a company is taxed is set out in the piece on corporate income tax for an s.r.o.

Conclusion

Whether you pay income tax advances is decided by the size of your last known tax liability: nothing up to CZK 30,000, two advances of 40 % from CZK 30,000 to 150,000 (15 June and 15 December), and four advances of 25 % above CZK 150,000 (March, June, September, December). Advances are not paid on the tax attributable to employment, and a new taxpayer need not deal with them in the first year. At heart it is simply the same tax spread across the year — whoever knows their last tax figure can work out the dates and amounts in advance and will not be caught out.

Frequently asked questions

Who has to pay income tax advances in Czechia?

Advances are paid by anyone whose last return showed tax above CZK 30,000. With tax from CZK 30,000 to CZK 150,000 you pay two half-yearly advances; above CZK 150,000, four quarterly ones. A taxpayer with tax up to CZK 30,000, and anyone filing a return for the first time, pays no advances. The rule is the same for sole traders and limited companies.

How much are the advances and when are they due?

With last tax from CZK 30,000 to CZK 150,000 you pay twice a year at 40 % of the tax, due on 15 June and 15 December. With tax above CZK 150,000 you pay four times a year at 25 % of the tax, on 15 March, 15 June, 15 September and 15 December. Each advance is rounded up to whole hundreds of crowns. If a due date falls on a weekend, it moves to the next working day.

Do I have to pay advances if I run a business alongside a job?

It depends on the ratio. If your employment income makes up at least half of the tax base, no advances from the business are paid at all, because the tax on your main income is already paid as it accrues by your employer. If employment makes up 15 % to less than half, you pay advances at half the amount. Only when the share of employment is under 15 % do you pay them in full.