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Tax duties of foreigners in the Czech Republic

photo:  (sxc.hu)

Foreigners who work in the Czech Republic have the same X3 tax rights and duties X3 as Czech citizens. If a foreigner is a tax resident (taxpayer) of the Czech Republic, he has unlimited tax liability in the Czech Republic.

Tax residents of the Czech Republic are those foreigners who have their home address in the Czech Republic or who usually stay for more than 183 days during a tax year. On the contrary, a foreign-non-resident does not stay long and usually stays only temporarily, e.g. for medical treatment or studies, etc. and their home address is in another country.

A foreigner who is a taxpayer in the Czech Republic also has the duty to state on their tax return not only sources of income in the Czech Republic but also their sources of income abroad. Income from abroad is understood to be income that comes from sources abroad and is subject to taxation abroad. In order to avoid X1 double taxation X1 of this income, e.g. the same property in the source country and in the country of the recipient, and also so that some income does not remain untaxed,  X1 Double Taxation Treaties X1 exist between countries.

Double Taxation treaties stipulate, with regard to individual types of income, in which treaty country the tax is applicable – whether the source country or the country of the recipient. With regard to income that is subject to withholding tax (dividends, interest, licensing fees), the treaties stipulate the highest tax that can be applied in the source country, without regard to internal legal regulations (treaties take precedence over internal – domestic legal regulations).

Foreigners in the Czech Republic can also utilise various forms of tax allowances. However, they can utilise them only if 90 percent of their income is from the Czech Republic.

Useful links:
X2 A detailed overview of the taxation of foreigners system X2
Author: Ivana Jenerálová
Added: 01.03.2011

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