Annual tax reconciliation (RZÚ)

This option is the simplest for employees. By 15.2., they must submit a request for annual tax reconciliation to the payroll accountant, who completes it by 31.3. at the latest. The employee cannot end up with tax arrears unless a payroll error occurred during the year. Overpayments above CZK 50 are refunded, and the employee receives the amount included in their next net wage. The employer then settles the reconciliation with the tax office.

But, as always, there are several catches. Annual reconciliation is available only to an employee who worked for one employer throughout the year or whose jobs followed consecutively. In the reconciliation, they can claim tax credits and deductions, such as donations, mortgage interest or the child tax credits increased this year. However, you must watch out for other income. An employee may work under agreements without signing the pink taxpayer declaration, meaning withholding tax was always deducted, or have other income under Section 10 of up to CZK 6,000. 

Annual reconciliation can be worthwhile even for those who will not claim any additional deductions. Because monthly advances and total annual tax are calculated differently, you may have a small overpayment (around CZK 50–100). 🙂 

Tax return

However, if an employee does not meet the above conditions, they must file a tax return. For example, if the employee also has income from business, letting, dividends, a property sale, and so on. In that case, the employer is not obliged to carry out an annual reconciliation. The employee’s tax return can be prepared by an accountant or they can prepare it themselves. 

For an employee, it may be worthwhile to file a tax return voluntarily. For example, if they had income from several part-time jobs or agreements during the year. The overall tax calculation may produce an overpayment that the tax office refunds to their bank account.

Of course, if an employee misses the deadline to request an annual reconciliation, they can file a tax return voluntarily. The main difference is that the tax office pays the money directly into their bank account. A minor difference is that the tax office refunds only amounts above CZK 200.

In some cases, you can prepare a tax return yourself. If you are unsure, however, a capable accountant will handle it easily. If you need help, please get in touch and we can look at it together. 🙂