At present, income based on an agreement to complete a job that does not exceed CZK 10,000 a month is taxed with withholding tax.
The withholding tax will now also be applied to income from the same employer not exceeding the agreed amount of CZK 2,500 per calendar month, irrespective of the legal background of the income (employment contract, agreement to perform work, etc.). The old legislation led to the demotivation of taxpayers concerning activities from which the income up to CZK 2,500 originated, because such income in concomitance with other income from employment activity led to the obligation to file a tax return.
The new legislation should remove this tax liability. Taxpayers will have the possibility to apply Section 36 (7) of the Income Tax Act (ITA) to decide whether to file a tax return by themselves and offset the withheld tax against the total tax.