Other Taxable Income in the Tax Return: What Is the Most Common Type of Income?

In the Czech Republic, the tax return includes not only taxable income from employment, self-employment, or rental activities, but also other types of taxable income. But what exactly does that include?

These types of income are defined in Section 10 of the Income Tax Act. Taxpayers who have such income are required to complete Appendix 2 of the tax return form, where they calculate their partial tax base. As a result, they must submit the full four-page tax return.

The Most Common Types of Other Taxable Income

Other taxable income includes irregular or one-off income that exceeds a certain limit, income from securities if exemption conditions are not met, income from the sale of real estate that doesn’t qualify for exemption, and also income from life or pension insurance if the contract is terminated early.

Limit on Incidental Income

As of 2024, incidental income up to CZK 50,000 per year is exempt from income tax. This applies only to occasional income – not income earned under a business license, which is always considered self-employment income.

Occasional income can include things like harvesting and selling produce from your garden, renting out movable property occasionally, and other irregular activities. If the exemption threshold is exceeded, the full amount becomes taxable. For example, if you earn CZK 70,000 from incidental income, you must declare the entire CZK 70,000 in your tax return – not just the amount over the limit.

Tax Exemption for Securities

Income from the sale of securities is exempt from income tax if the total amount does not exceed CZK 100,000 in a given year. A higher amount can also be exempt if the securities were held for more than three years before being sold. If neither of these conditions is met, the income becomes taxable. In such cases, the partial tax base is calculated as the income from the sale minus the related acquisition costs.

What Should You Watch Out For?

According to the Income Tax Act, the partial tax base for this type of income cannot be negative. This means that if an employee sells securities at a loss, they cannot use that loss to reduce their overall annual tax base.

One important advantage of other taxable income is that it is not subject to social or health insurance contributions. These contributions are only required for active income – such as employment or self-employment earnings.

Early Termination of Life Insurance and Pension Contracts

Life insurance, supplementary pension insurance, and additional pension savings are recognized as state-supported tax products. When the conditions are met, individuals can deduct the contributions made to these contracts from their taxable income. However, if such a contract is terminated early, any tax benefits claimed over the past ten years must be paid back.

In the tax return, the total amount of previously claimed deductions is reported in Appendix 2 and is considered taxable income under the Income Tax Act.

Example

In 2024, Jana decided to terminate her life insurance contract early. For the past ten years, she had claimed a tax deduction of CZK 12,000 each year. This means her total additional taxable income for 2024 will be CZK 120,000. Since her total annual tax base is less than CZK 1,582,812, this income will be taxed at a 15% rate. As a result, her annual income tax will increase by CZK 18,000 (15% of CZK 120,000).

Income from the Sale of Real Estate

If none of the statutory conditions for tax exemption are met, income from the sale of real estate becomes taxable. In this case, the taxable amount is calculated as the difference between the sale proceeds and the related expenses, and is included as a partial tax base in the tax return.

However, income from the sale of real estate may be exempt from personal income tax if the taxpayer meets the time test or uses the proceeds to address their own housing needs.

Example

Michal bought an apartment in 2022 at a favorable price and rented it out. In 2024, he decided to sell it. Because the apartment was acquired after January 1, 2021, a 10-year holding period must be observed to qualify for tax exemption. Since Michal sold the apartment only two years after purchase, the profit from the sale will be subject to income tax in his 2024 tax return.

Not sure whether your real estate sale qualifies for tax exemption? Or worried you might miss an important detail in your return?

Book a personal consultation with the specialists at 360WEDO — we’ll guide you through every step and help you avoid unnecessary tax burdens.

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