Inactive company and taxes - when to file a zero tax return?

There are over 500,000 registered legal entities in the Czech Republic, but 20% of them are not actually doing business. The number of "dormant companies" has declined in recent years, but their owners should beware. What about the tax return for an inactive company with no income? Find out all about zero returns.

Business tax returns: what if yours has no income?

You set up a company with the intention of doing business in the future or your business plan didn't work out. Reasons like these lead to an alarming statistic that comes from an analysis by consultancy firm Dun & Bradstreet - one in five Czech companies is not actually in business. But that doesn't mean it is not subject to tax obligations.

The law is clear and there is no exception for legal entities - you must always file a tax return for a company, even if it is zero. So, as the managing director of an inactive limited company or the statutory body of a dormant company limited by shares, you are obliged to file an income tax return even though your company did not report any activity or have any taxable income in the past year. In addition, you must also publish your accounts in the Companies House.

How and when to file a zero tax return?

You can find a template corporate income tax return (CITR) for the previous calendar year on the My Taxes portal. Send the completed return to your local tax office by the due date:

• by 1 April,
• by 1 May for electronic filing,
• by 1 July if a tax advisor, lawyer or a company registered with the Chamber of Tax Advisors files the return on your behalf on the basis of a power of attorney.

If you do not file your return, you may face penalties

Always inform the tax office about your zero, otherwise the officials will not know about the company's inactivity. If you forget to file your return and do not send it in by the deadline, the tax office will ask you to file it and give you an alternative deadline.

If you do not file the tax return even after the request, the tax office may impose a fine for non-compliance with a non-monetary obligation pursuant to Section 247a of the Tax Code 280/2009 Coll. We recommend that you take the time to fill in the form or have it prepared - it is definitely worth it, as the penalty for failure to file can be up to CZK 500,000.

What about other taxes?

If your company is inactive, it will not avoid other obligations depending on which taxes it is registered for:

• If you are a VAT payer and have no outputs, you must file a zero VAT return (after a while the tax authorities will deregister you).
• If you are registered for road tax, you should file a nil return or send a general letter. This will state that you have not incurred any tax liability in that year.
• The same procedure should apply for withholding taxes or payroll taxes.

Don't waste time on forms and rely on experts

Do you need to file a tax return for a company with zero income and don't know what to do with it? Contact us and we'll handle your corporate income tax for you.