NewsDeloitte: Czechs will Spend 181 Days Working to Pay Taxes as this Year’s Tax Freedom Day Falls on 30 June

This year, taxpayers in the Czech Republic will spend 181 days working to pay taxes, which is one day more than last year; after final recalculation, it was 180 days in 2019. According to Deloitte’s calculations, Tax Freedom Day will fall on 30 June 2019. Approximately the same case as in the Czech Republic will apply to the UK and Norway. Taxpayers will have to spend the most days paying taxes to the government in Denmark, while the fewest in Romania and Bulgaria.

“In 2020, the total tax burden in the Czech economy should slightly increase again. This year brings several important changes. Right at the beginning of the year, excise taxes on heated tobacco products, alcohol, and gambling increased. The increase in the total tax burden should in turn reduce the decrease of VAT in the following areas: water and sewer rates, catering services, bike repairs or hairdresser’s and barber’s services. The total tax burden will also be influenced by a further increase in expense lump sums,” says David Marek, Deloitte´s Chief Economist. “In the long term, the level of taxation is on the rise in the Czech Republic and, as the date of its Tax Freedom Day suggests, its total tax burden ranks it among the EU’s upper half.”

Taxes in Practice: Increased Administrative Work, More Stringent Audits and Frequent Changes to Legislation

Taxpayers and remitters have been experiencing an increase in the number of tax requirements in the long term. Businesses spend a rather lengthy amount of time on tax compliance, which is also for the reason that, in a number of cases, they do not merely explain the misstatements in their reports, but also clarify misstatements made by their business partners. A well-designed information system that respects all local specifics and frequent changes in legislation and interpretations could be a solution, but this is a very expensive matter for large and multinational companies.

Tax authorities assess the overall economic and tax situation of the taxpayers/remitters based on a more detailed analysis of the data in tax returns and reports and other information sources. This places greater demands on correct systems setup as well as on the skills, knowledge, and regular training of taxpayers’ employees.

“Taxpayers and remitters will face several changes in 2020. The number of taxpayers who are obliged to record their sales will increase. Intra-Community transactions will require more precise and systematic documentation to demonstrate that the goods have been delivered to another member state. This change requires a cooperation of finance, business, and logistics departments. Discussions are taking place regarding the introduction of a digital tax, which could affect several large Czech companies. Another important change is a forthcoming amendment to the Tax Code, which, for example, could extend the deadline for payments of excess deduction. Such measures would have a negative impact on cash flow in some companies,” says Radka Mašková, Director at Deloitte’s Tax services. 

Tax Freedom Day

Tax Freedom Day is a simple and easily comprehensible demonstration of the tax burden in the economy. The method used for calculating the date of Tax Freedom Day divides the year into two parts, in a ratio corresponding to the proportion of the government sector’s total taxable income to net national income. Calculations for prior years are always updated in reviewing the statistical offices’ data used in the calculation.

The number of days for which taxpayers in the selected countries of the EU need to work to pay taxes to the government and the date of Tax Freedom Day:

Country Number of days Tax Freedom Day
Romania 122 2 May
Bulgaria 129 9 May
Lithuania 136 16 May
Estonia 154 3 June
Spain 155 4 June
Cyprus 155 4 June
Slovakia 155 4 June
Poland 158 7 June
Latvia 159 8 June
Ireland 168 17 June
Portugal 177 26 June
Slovenia 178 27 June
United Kingdom 179 28 June
Czech Republic 181 30 June
Norway 182 1 July
Greece 184 3 July
Hungary 189 8 July
Finland 189 8 July
Italy 191 10 July
Germany 195 14 July
Austria 196 15 July
Netherlands 208 27 July
Switzerland 209 28 July
France 219 7 August
Belgium 220 8 August
Sweden 220 8 August
Denmark 226 14 August