Compensation bonus for the self-employed and notice on exempted income
The government has approved a bill on a compensation bonus payable to self-employed people in connection with emergency coronavirus measures. The bill has yet to be enacted by the Parliament and signed by the President. This, however, can be expected by 12 April 2020 at the latest.
The tax bonus should be used to compensate the negative consequences of emergency measures affecting the self-employed as they are unable to perform their activities, either fully or to a substantial extent.
This is a one-off allowance in the amount of CZK 500 for each calendar day of the relevant period (i.e. from 12 March to 30 April 2020). The total maximum amount of the tax bonus could thus reach CZK 25,000 (compared to the originally proposed CZK 15,000 per month).
To obtain the compensation bonus, the self-employed has to meet the following criteria:
- the inability to work was caused by the emergency measures, either fully or to a substantial extent;
- as a result of the emergency measures, gross income from self-employment over the period of three calendar months preceding the end of the bonus period was less than 90% of the income from similar self-employment in the same period of the preceding year, and
- gross income from self-employment for the preceding year equalled at least CZK 180,000.
If such self-employment did not exist during a part of the preceding year and it is thus not possible to assess the year-on-year decrease in income, the comparison should be made in respect of the first three calendar months of 2019 when the given person was self-employed.
If the gross annual income of the self-employed for 2019 was less than CZK 180,000 because the self-employment situation existed only for a part of the year, it is sufficient if the self-employed attained, in the preceding calendar year, at least an income equal to the product of the amount of CZK 15,000 and the number of calendar months in which the given person was self-employed.
The application for a compensation bonus must be submitted within 60 days of the end of the bonus period. If the application is not submitted by the above deadline, the entitlement to the compensation bonus expires. The application form should be published by 3 April 2020.
The deadline for submitting a notice on exempted income was 1 April
Although the deadline for filing a personal income tax return for 2019 has been “de facto” moved from 1 April to 1 July 2020, it should be borne in mind that this does not apply to a notice on exempted income which the natural person received in the calendar year 2019.
Since the deadline for filing the tax return for 2019 has not been postponed “de iure”, default interest will only be waived indiscriminately for late filing of a tax return and late payment of tax. This means that the latest date for submitting a notice on exempted income for 2019 (1 April 2020) has remained unchanged.
The deadline for filing a notice on exempted income may only be postponed if the tax return for 2019 is being prepared and will be filed by a tax advisor based on a power of attorney submitted to the tax administrator by 1 April 2020. But if you do not have a tax advisor or if you are even not obliged to file a personal income tax return for 2019 (e.g. if your employer has prepared an annual tax settlement for 2019 for you), the deadline for filing a notice on exempted income expired on 1 April 2020.
If the notice is submitted after this deadline, without the tax administrator expressly inviting you to do so, the administrator will charge a fine of 0.1% of the amount of your income exempted from tax.