As in previous years, in 2012 the current tax reliefs will still apply. Due to the fact that not all of them are known to the clients of our company, in cooperation with the financial advisor Fincentrum, we have prepared an overview of the most important discounts.
Due to the method of deduction, we divide the relief into those that lower the tax base and those that lower the tax liability (deducted from the amount of tax due). The latter are most known to a wide group of people - in the form of a taxpayer, unemployed spouse and children relief.
Of the above-mentioned allowances, special attention should be paid to the allowance for children, which is paid even when it exceeds the tax liability (if the amount of tax due is lower than the value of the allowance, the tax office will pay it in the form of a subsidy). On the other hand, people under the age of 25 may be particularly interested in the student tax credit.
Tax credits deductible
The least known reliefs among foreign entrepreneurs are the two reliefs related to life insurance and pension insurance. The first relief applies to those taxpayers who decide to take out a life insurance policy. The premiums for the policy constitute the tax-free amount, provided that the contract is concluded for a minimum of 5 years and the pension is not paid before the age of 60. If the five-year contract will expire before reaching the age of 60, a new contract must be signed to which the capital accumulated so far will be transferred. This option allows the client to choose a fund that invests better.
If the customer does not renew the contract and pays the capital, he will be required to return the tax deduction (retroactively). In addition to reaching the age of 60, the policy will also be paid in the event of an early death and in some cases also invalidity.
Investments in pension funds are the second option of saving for retirement related to concessions. People who decide to save more than CZK 100 per month and less than CZK 500 will receive a subsidy from the state budget. People who decide to make larger payments receive a subsidy up to the premium of CZK 500, and the amount above creates a tax-free amount. Only a person under the age of 60 who will be subject to Czech insurance regulations and will pay premiums continuously is eligible for this relief.
If, before reaching the age of 60, the entrepreneur ceases to conduct business activity and loses health insurance in the Czech Republic, the fund will return the subsidy to the budget from the accumulated capital, and the deferred contributions with interest will be paid to the client. However, if the taxpayer used the tax credit at the same time, he will have to pay the tax deducted earlier.
In addition to the above-mentioned investment incentives, the tax-free amounts are donations, fees for examinations increasing our professional competences, which have not been included in the company's costs (e.g. language certificates) and blood donated in Czech blood donation stations and hospitals (a blood donation ratio applies).
Relief for employers
Employers who choose to pay an employee a bonus in the form of a subsidy to his investment in pension funds may include the entire bonus in operating costs. The bonus paid in this way is not included in the basis of tax advance and employee insurance premiums. If the employer dismisses the employee or resigns from this form of paying the bonus, he does not lose the current deductions.
How to save so as not to lose?
People who decide to get reliefs related to savings, we recommend a combination of both types of insurance - life policy and pension fund with a premium of up to CZK 500. Even in the case of early termination of the business, the client may only transfer the accumulated capital to the next life policy (without investing new funds), and the capital from the pension fund will be paid out together with interest on the investment.