The Czech Republic Has Changed the Conditions for the Tax Rebate for a Non-Working Spouse

The tax rebate for a spouse is one of the key benefits that can help reduce tax liabilities, not only for low-income families. However, as of 2024, the rules for claiming this rebate in the Czech Republic have changed, impacting many individuals filing their tax returns this year.

In this article, we explain who is still eligible to claim this benefit in their tax return for the previous year.

How Did the Spousal Tax Rebate Work Until the End of 2023?

Until the end of 2023, taxpayers could claim a spousal tax rebate of CZK 24,840 if they lived in a jointly managed household and their spouse’s annual income did not exceed CZK 68,000. If the spouse held a disability certificate, the rebate was doubled to CZK 49,680.

What Are the New Conditions in 2024?

Starting in 2024, an additional requirement has been introduced alongside the existing conditions. To qualify for the rebate, a taxpayer’s spouse must live in the same household with a dependent child under the age of three. This means that if there is no child under three in the family, the rebate will no longer be granted. The income limit of CZK 68,000 per year remains unchanged.

What Is Considered Income?

When calculating the CZK 68,000 income limit, earnings from employment, entrepreneurship, rental income, and other taxable sources are taken into account. Additionally, sickness benefits, maternity benefits, parental allowances, as well as old-age, disability, and widow’s pensions are included.

However, child care benefits, material need allowances, scholarships, and state contributions to pension and building savings are not considered income.

What Is Included in the CZK 68,000 Limit?

All taxable income:

• From employment (Section 6)
• From business activities (Section 7)
• From rent (Section 9)
• Other income (Section 10), such as income from the sale of movable property

Income exempt from tax:

• For example, income from the sale of tax-exempt real estate, gifts, etc.

Income subject to withholding tax:

• For example, income from employment contracts up to CZK 10,000 per month (if withholding tax was applied).

Non-monetary income:

• For example, gifts received, non-monetary benefits from employers, interest-free loans, etc.

Benefits:

• Sickness benefits, maternity benefits, parental allowances

All pensions:

• Old-age, disability, widow’s, widower’s, and orphan’s pensions

What Is Not Taken Into Account When Determining the Income Limit

• Disability benefits, financial assistance, and state social assistance, as well as benefits for caring for foster children (except for remuneration paid to the foster parent).
• Care benefits and social services.
• State contributions to supplementary pension schemes.
• Scholarships granted to students who are actively preparing for a future profession.
• Income from caring for a relative or another person entitled to a care benefit under the Social Services Act, if such income is tax-exempt.
• Income resulting from a violation of the conditions for tax exemption or the application of the non-taxable portion of the tax base.

How Can I Apply for the Discount?

To claim the discount, you must provide confirmation of your spouse’s income and a copy of the child’s birth certificate as proof of age. If you are applying for an increased discount due to a disability (ZTP/P status), relevant documentation must also be submitted.

The spousal tax discount applies for the entire calendar year, provided the eligibility criteria are met on the first day of the month. For example, if a child turns three on August 17, 2024, the discount can still be applied for August but not for September or the following months.

To ensure correct application of the tax refund, it is essential to track your spouse’s income and the child’s age. If you are unsure about your eligibility, we recommend consulting 360WEDO tax advisors – simply submit a request on our website, and we will get in touch. You can also use online tools to assist with the calculations.

What to Do If the Bonus Was Applied Incorrectly?

If the tax office determines that the discount was applied incorrectly, it will require repayment. This means the taxpayer must return the amount owed, including any accrued interest for late payment.

Currently, the Daňové echo II project is addressing this issue, specifically focusing on incorrectly claimed spousal discounts for 2022. The Tax Administration has already sent notices to over 3,500 taxpayers, with an estimated total refund amount of up to CZK 80 million.

https://zpravy.aktualne.cz/domaci/slevy-na-manzelku-ci-manzela-v-danovem-priznani-za-rok-2024/r~7ef6ef4cf47c11efbb77ac1f6b220ee8