How to Avoid Paying Taxes or Pay Less

Quick Overview

There are three main legal ways to reduce your tax liability: by claiming tax credits, deducting non-taxable portions of your taxable income, and properly reporting your expenses if you’re self-employed. Not everyone is required to file a tax return, but it can sometimes be worthwhile even for those who aren’t required to—for example, if they didn’t take full advantage of all available tax credits during the year or if withholding tax was deducted from their income under a contract.

It’s usually worth checking:

• whether you’re eligible for a tax credit for yourself, a child, or a spouse,
• whether you can deduct mortgage interest, charitable donations, pension savings, or life insurance premiums,
• whether a flat-rate deduction, actual expenses, or a flat-rate tax is more advantageous for you,
• whether you have an overpayment,
• whether you have all the necessary documents, confirmations, and affidavits.

Not sure which deductions and credits you can claim in your specific situation? Our attorneys will help you assess your tax liability, prepare the necessary documentation, and avoid mistakes that could lead to an audit or additional tax assessment.

What Is a Personal Income Tax Return and What Does It Include?

An individual files a tax return with the tax office, reporting their income, expenses, and other circumstances ( e.g., tax credits) that affect the calculation of their tax liability. Based on this return, the amount of tax the individual owes to the state is then determined.

Therefore, you must report all your income on the tax return, with the exception of income that is exempt from income tax or from which tax is withheld at a special rate. If you are self-employed, you must also report your expenses, and the tax is calculated based on the difference between your income and expenses. The exception is if you pay a monthly flat-rate tax.

How to Avoid Paying Taxes or Pay Less

Who Doesn’t Pay Taxes

Filing a tax return or paying taxes is not always mandatory. You are not required to do so in the following cases:

• If your taxable income for the previous year did not exceed 50,000 crowns. This amount does not include tax-exempt income, such as various contributions, benefits, or occasional income up to 30,000 crowns per year. Similarly, income from a contract for work up to 10,000 korunas per month or from a contract for services up to 4,000 korunas per month is also excluded. This also includes royalties up to 10,000 korunas per month.
• This appliesif you were employed by only one employer. It also applies if you had multiple employers, but never simultaneously. However, you must sign a tax declaration with each of your employers. In this case, you are, of course, liable for taxes, but your employer withholds them on your behalf and also files your tax return.
• If you are employed abroad and that is your sole source of income.

Be aware, however, that “I don’t have to file a tax return” does not always mean “it’s not worth my while to file one.” If you had temporary contracts during the year, switched jobs, were unemployed for part of the year, or didn’t claim all your tax credits, you may be entitled to a refund. In such a situation, it’s worth having your return at least reviewed before you unnecessarily lose out on money.

We know from experience that people often confuse two different things: the obligation to file a tax return and the financial benefit of doing so. For example, we handled a case involving a client who had several short-term contracts during the year and believed that filing a tax return did not apply to him. After reviewing the supporting documents, it turned out that by voluntarily filing, he could have recovered a portion of the tax withheld. In similar situations, we therefore recommend not relying solely on general rules, but rather reviewing your specific income, deductions, and tax certificates.

In some cases, however, filing a tax return may be in your best interest. This applies, for example, to situations where you did not provide your employer with documentation for tax deductions, such as pension insurance payments or blood or plasma donations. The same applies if you did not claim the tax credits to which you are entitled. These include, for example, the student deduction, the spousal deduction, and so on. It’s also worth filing a tax return if you worked under a contract for services and withholding tax was deducted from your income. In addition, it’s a good idea to file a tax return even if you didn’t work at all during the year and therefore didn’t fully utilize the taxpayer deduction, which for 2025 is 30,840 crowns per year.

How to Pay Less in Taxes

You can save quite a bit on taxes. There are, in fact, a number of different deductions and tax credits:

• Flat-Rate Tax: If you’re self-employed, you can save a lot on taxes thanks to the flat-rate tax. Under this system, you don’t have to document your actual expenses; instead, your expenses are automatically determined based on which tax bracket you fall into. Therefore, if your expenses are low, the flat-rate deduction will likely be quite beneficial for you.
• Increase Your Expenses: If you don’t use the flat-rate deduction but instead deduct standard expenses from your profits, then it logically pays to keep your expenses as high as possible. So be sure to carefully record all your expenses and include everything related to your business, even if only marginally.
• Mortgage and Home Savings: If you’re paying off a mortgage or a home savings plan, you can deduct the interest from your taxable income. The limit is set at 300,000 crowns per year for loans taken out before 2021 and 150,000 crowns for interest on loans taken out after 2021.
• Spousal Tax Deduction: If your spouse’s income for the previous year did not exceed 68,000 korunas, you can claim a tax deduction of 24,840 korunas for them. It is important to note that the following are not included in this limit: parental allowance, childbirth allowance, child allowance, social assistance benefits, housing allowance, emergency financial assistance, the state contribution to pension savings, construction savings, and student scholarships.

Tip: There have recently been changes to certain tax credits and deductions. For example, the student tax credit of 4,020 Kč has been eliminated. The spousal tax credit can only be claimed if the spouse is caring for a child under 3 years of age in a shared household.

• Donations: You can deduct donations—that is, items you have given to someone for free—from your taxes. However, such a donation must be worth at least 1,000 crowns or exceed 2% of your taxable income. You can deduct up to 30% of your tax base. Donations must be made for public benefit purposes (e.g., healthcare, education, charity, culture, science, the environment, sports, and support for churches and religious organizations). Donations may be made in cash or in kind (e.g., goods, services); however, you must always provide a donation agreement or a confirmation from the recipient of the donation.
• Supplementary Pension Insurance and Life Insurance: If you pay for either of these types of insurance, you can deduct the payments from your taxes, up to 24,000 crowns per year. However, you must contribute at least 1,000 crowns from your own funds toward the insurance.
• Blood and plasma donations: If you donate blood or plasma, you can claim a deduction of 3,000 korunas for each donation. However, the donation must be unpaid—that is, you must not receive any compensation for it. The maximum deduction you can claim this way is 15% of your taxable income per year.

Tax Refunds and Tax Liabilities

You can only request a tax overpayment refund if the amount exceeds 200 crowns. You must request the refund electronically—either through the tax office’s application, as an electronic submission to the Financial Administration, or via a data box. Another option is to send an email, which you must confirm, for example, in hard copy with your signature. The overpayment will then be refunded to you within thirty days, either to your bank account or by check mailed to your address.

On the other hand, if you have a tax underpayment, you must pay it by April 3 if you filed a paper tax return, by May 2 if you filed an electronic tax return, and by July 3 if your tax return was filed by a tax advisor or attorney. You can pay at the cashier’s desk of any tax office, by payment slip, or by bank transfer to the account of the tax office with which you are registered (see Where to Pay Income Tax).

If you have an unexpected tax liability or if the tax office has asked you to supplement or correct your return, do not delay in responding. Timely legal consultation can help you avoid penalties, late payment interest, and unnecessary disputes with the tax authorities.

Summary

Not everyone is required to file a tax return, but the obligation depends on the amount and type of income, as well as any combination of employment, self-employment, rental income, contract work, and foreign income. Even if you are not required to file a tax return, it may be worth doing so voluntarily, especially if you did not take full advantage of all tax credits during the year, worked under a contract with withholding tax, or had lower income for part of the year. You can legally reduce your tax liability through tax credits, deductible items, charitable donations, mortgage interest, pension savings, life insurance premiums, or appropriately selected business expenses for self-employed individuals. However, it is always necessary to base your calculations on the current version of the Income Tax Act, monitor the limits for the given year, and have your supporting documents ready. If you end up with an overpayment, you must file a proper request for a refund; conversely, if you have an underpayment, you must pay it on time. For more complex income situations, business activities, or notices from the tax office, it’s worth consulting an expert before a mistake leads to a tax assessment or penalty.