Authorities in the Czech Republic are considering a new requirement that could force hundreds of thousands of people to learn how to complete tax returns, just five months before the elections, according to Seznam Zprávy commentator Martin Čaban.
In March, the government adopted a proposal to introduce a unified monthly reporting system for employers. On paper, this system aims to streamline reporting by consolidating multiple forms into a single monthly data package sent to one central office. From there, relevant agencies such as social security, tax authorities, employment centers, and statistical offices would receive the necessary information.
If successful, this move could advance the country’s digitization efforts, and the Ministry of Finance has hailed it as the first step toward the long-discussed Unified Data Collection Point. However, the main obstacle to achieving this goal is the lack of involvement from health insurance in the process.
Despite its potential benefits, this new system has raised concerns about its feasibility. There are worries about the system’s creation and functionality, as well as doubts over whether the bill will be passed in time before parliament breaks for elections. Additionally, the proposal brings about a significant, yet less obvious problem.
The new law includes provisions to abolish the tax on small additional incomes, a move that will affect people earning less than 11,500 crowns from a single employer under a work contract. Currently, these individuals do not have to file a tax return for such small earnings, as the tax is automatically withheld at 15%. Under the proposed changes, individuals will receive their full earnings and will need to declare and tax this income through a tax return.
This change will impact tens of thousands, potentially hundreds of thousands, of people who will be required to learn how to fill out tax returns—many of whom have never had to do so before. According to accountants, the new rules will affect income from all minor jobs, and people may face the challenge of handling tax returns even if they only earn additional income on top of their main job.
What’s especially concerning is the Ministry of Finance’s lack of preparedness. The ministry did not provide a thorough analysis of how many people will be impacted by this change. In response to concerns raised by the Chamber of Tax Advisors, the ministry admitted that an analysis was not included in the bill due to time constraints and the limited scope of the final impact assessment report.
The Ministry of Finance has promised that by 2027, the tax system will be refined enough to automatically fill out tax returns for taxpayers, requiring only a few clicks to submit. However, given the Czech Republic’s mixed track record with digitization, this promise should be taken with caution.
Behind these optimistic projections lies the reality of new administrative burdens for a significant number of people, ranging from temporary workers to municipal politicians, as well as the tax administration itself. Even if the ministry’s predictions come true, the change will drastically affect tens of thousands of people who are accustomed to not dealing with tax returns due to tax withholding. Now, these individuals will have to navigate the digital tax return process, which, while it may require “just a few clicks,” still represents a far more complex task than they previously faced.
As reported by Hospodarske noviny, in 2024 alone, around 120,000 people are expected to hold multiple work contracts simultaneously. These individuals could be hit hardest by the new tax rules.
While the Minister of Finance may present this surprise reform as part of an effort to streamline bureaucracy and reduce administrative costs, it is clear that the timing—just before the election campaign—adds another layer of complexity and uncertainty to an already challenging situation.
