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Tax changes in 2017 and for 2018

The Amendment to the Income Tax Act brings several significant tax changes. Although the legislative process lasted longer than expected, some tax changes have been in place since the beginning of this year. However, most tax breaks will only be effective for the tax year 2018. Let's look at selected tax changes.

Tax benefit to children

The change, which is valid for the entire calendar year 2017, is to increase the tax benefit to the second and next child. The annual tax benefit for the first child continues to be CZK 13,404, the same as for the year 2016. The benefit to the second child increases by CZK 2,400 to the amount of CZK 19,404 and to the third and another child by CZK 3,600, ie to 24,204 CZK. However, the tax amendment has not yet been announced in the Collection of Laws, therefore, in the calculation of the monthly net wage of employees, the tax advantage is still applied to the second and next child in the lower monthly amount. A tax benefit may be claimed by only one parent.

How high will the employee overpaid?

Employees applying a tax benefit to two or more children will be entitled to a tax surcharge after the 2017 annual tax assessment, as a lower tax advantage has been applied in the first months of 2017. If an amendment is published in the June Collection of Laws, a higher monthly tax benefit will be applied to the second and next child for the first time when calculating the July net monthly wage. "Employees with three children would have the right to a tax surcharge of CZK 3,000 after the annual settlement in 2017, ie 500 CZK for January to June," says Gabriela Ivanco (Mazars *).

Tax deductions using the flat rate

In the tax return for 2017, self-employed persons applying the flat-rate allowance will be able to use a tax rebate on a spouse with their own income not exceeding CZK 68,000 per year and a tax benefit to children. The condition, however, is that the lump sum will count on a maximum of CZK 1,000,000 per year. If a self-employed person opts for a tax deduction for a wife and does not benefit from the child benefit, they will still be able to calculate a flat-rate flat fee of CZK 2,000,000 in the tax return for 2017. The flat rate is calculated by the respective percentage of annual revenue, but the established limit is indirectly set a ceiling for flat rate expenditures. "Millions of income ceilings are only required to calculate the tax base in the tax return for 2018, but who will want to claim a discount on a wife and children already in the tax return for 2017, he will have to keep a lower limit already in the tax return for 2017, " Adds Gabriela Ivanco.

Restriction of the tax bonus

If a tax benefit is higher than the calculated income tax, a tax bonus is claimed. In this case, no tax is payable, but the taxpayer receives the money from the state. However, the tax bonus can only be paid if annual earnings from dependent activity, self-employment, capital gains and rent of at least six times the minimum wage for the entire calendar year 2017 are at least CZK 66,000. For the year 2018, however, only income from dependent activity and self-employment will be counted. "In 2018, it will no longer be possible to obtain a tax bonus from passive income, that is, from capital income and rental income," adds Gabriela Ivanco.

More favorable conditions for an agreement on work activities

Some people have a duty to file a tax return because they earn some months on their main job on the basis of a work-related agreement, for example because of the performance of a job. The tax return is required to give to anyone who receives at least one month of income from two employers from whom the advance income tax has been paid. However, from 2018 onwards, a deduction tax based on an agreement on work activities of less than CZK 2 500 will be deducted. Therefore, for monthly bonuses not exceeding the limit of CZK 2,500 from the agreement on work activities, the same regime as for remuneration from an agreement on the performance of the work will not apply in the amount of CZK 10,000 per month.

Tax exemption on the sale of real estate

No personal income tax is payable on the sale of real estate when the sale occurs within two years of the acquisition of the property if the condition of the seller's residence is fulfilled for the property sold and the income from the sale is used to settle the housing needs. The tax amendment further specifies the condition for exemption, so that it has to be directly related to the taxpayer's own housing needs.

* Mazars is an international, integrated and independent organization in the field of auditing, accounting, tax and advisory services.

Source: tz, edited editorially

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