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Financial Reporting for Businesses in the Czech Republic in 2025

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Financial Reporting for Businesses in the Czech Republic in 2025

Financial Reporting for Businesses in the Czech Republic in 2025

2025-03-20 11:04:30

Financial reporting is an essential part of running a business in the Czech Republic. Companies and entrepreneurs are required to track their income and expenses, file tax returns, and meet regulatory deadlines. While the core rules remain unchanged in 2025, there have been some updates: the criteria for mandatory audits have been adjusted, accounting in foreign currencies has been permitted, and new AML compliance requirements have been introduced for specific business sectors. In this article, we will examine the types of reports that must be submitted, the deadlines involved, and the potential consequences of non-compliance.

Legislative Framework for Financial Reporting in the Czech Republic

Before diving into reporting deadlines and requirements, it is crucial to understand the legal framework that governs financial reporting. In the Czech Republic, financial reporting is regulated by several key laws that outline who must maintain accounting records, what documents need to be submitted, and within what timeframes. Let’s take a closer look at these regulations.

Key Legislative Acts

Financial reporting in the Czech Republic is governed by several fundamental laws, each addressing different aspects of accounting and taxation:

Zákon o účetnictví (Act No. 563/1991 Coll.) – Accounting Act. Defines which companies are required to maintain accounting records, the accounting methods to be used, and the reporting formats to be applied.
Zákon o daních z příjmů (Act No. 586/1992 Coll.) – Income Tax Act. Specifies how corporate income tax is calculated, which types of income are taxable, and which expenses can be deducted to reduce the tax base.
Zákon o dani z přidané hodnoty (Act No. 235/2004 Coll.) – VAT Act. Regulates VAT registration requirements, tax calculation methods, and the submission of VAT returns.
Zákon o některých opatřeních proti legalizaci výnosů z trestné činnosti a financování terorismu (Act No. 253/2008 Coll.) – Anti-Money Laundering (AML) Act. Imposes obligations on businesses to implement measures preventing money laundering and terrorist financing. Under this law, AML-obligated entities must verify customer identities (KYC), monitor transactions, and report suspicious activities to the relevant authorities.

New Changes in 2025

This year, several changes have come into effect that will impact the financial reporting process:

Adjustment of Accounting Unit Categories – The threshold values for assets, turnover, and employee count have been increased for the first time in over 20 years.
- Micro-companies: Assets up to CZK 11 million, turnover up to CZK 22 million, up to 10 employees.
- Small companies: Assets up to CZK 120 million, turnover up to CZK 240 million, up to 50 employees.
- Medium-sized companies: Assets up to CZK 600 million, turnover up to CZK 1.2 billion, up to 250 employees.
- Large companies: Assets exceeding CZK 600 million, turnover over CZK 1.2 billion, more than 250 employees.
Mandatory Audit for Medium and Large Companies Only – Small and micro-entities are now exempt from mandatory audits, reducing administrative burdens.
AML Requirements. As of 2025, the scope of AML-obligated entities has expanded. Independent accountants must now comply with AML regulations, whereas previously, this requirement applied only to companies. Another new requirement mandates all AML-obligated entities to register a designated contact person in the AML register. This ensures that the Financial Analytical Office maintains a complete database of all AML-obligated entities.

Who Is Required to Submit Financial Reports?

Czech legislation defines who must maintain accounting records and submit financial reports:

Companies (s.r.o., a.s., and other legal entities) – Regardless of their size or turnover, all companies must maintain accounting records and file financial reports.
Foreign companies operating in the Czech Republic – If a foreign business operates through a branch or representative office in the country, it must comply with local accounting and tax regulations.
Sole proprietors (OSVČ) with annual turnover exceeding CZK 25 million – Upon reaching this threshold, OSVČ must keep full accounting records under the same rules as companies.

Types of Mandatory Financial Reports and Submission Deadlines in 2025

Let’s examine which financial reports must be submitted in 2025.

Annual Financial Statements (Účetní závěrka)

Annual financial statements are mandatory for all companies and large sole proprietors. This requirement is established by the Accounting Act (Zákon č. 563/1991 Sb.).

The financial statements include:

Balance Sheet (Rozvaha) – Reflects the company’s assets and liabilities.
Profit and Loss Statement (Výkaz zisku a ztráty) – Shows revenue, expenses, and financial results.
Notes to the Financial Statements (Příloha k účetní závěrce) – Provides details on accounting methods used.

If a company is subject to a mandatory audit (criteria for this will be discussed separately), additional reports must be included:

Cash Flow Statement (Přehled o peněžních tocích / Cash Flow) – Displays cash inflows and outflows.
Statement of Changes in Equity (Přehled o změnách vlastního kapitálu) – Explains changes in the company’s capital over the year.

Financial statements are an integral part of the annual report and must be submitted together. Filing is done electronically via the Finanční správa system and published in the Collection of Financial Statements (Sbírka listin obchodního rejstříku).

Who Requires a Mandatory Audit (Povinný audit)?

Some companies are required to have their financial statements audited. This requirement is outlined in § 20 of the Accounting Act.

An audit is mandatory if a company meets two out of three criteria for two consecutive tax periods (the current and the previous tax year):

Annual turnover exceeds CZK 80 million.
Assets exceed CZK 40 million.
Workforce exceeds 50 employees.

Since January 1, 2024, only revenue from the company’s core business activities (sale of products, goods, or services) is included in the annual turnover calculation. Revenue from asset sales or financial income (e.g., interest on loans, exchange rate differences) is excluded unless these activities are part of the company’s main business model.

If a business meets these conditions, its financial statements must be audited by an independent auditor registered with the Chamber of Auditors of the Czech Republic (Komora auditorů České republiky, KAČR).

Starting January 1, 2025, under the new Accounting Act, only medium-sized and large companies will be subject to mandatory audits.

Corporate Income Tax Return (Přiznání k dani z příjmů právnických osob, DPPO)

All legal entities must file a corporate income tax return, as required by § 38 of the Income Tax Act (Zákon č. 586/1992 Sb.).

Submission Deadlines:

By April 1, 2025 – If filed independently.
By May 2, 2025 – If filed via datová schránka (mandatory for sole proprietors (OSVČ) and companies using electronic government communication).
By July 1, 2025 – If prepared by a tax consultant or if the company undergoes an audit.

Tax returns can also be submitted via the Daňový portál electronic system.

VAT Return (Přiznání k DPH), Control Statement (Kontrolní hlášení DPH), and Summary Report (Souhrné hlášení)

Companies whose turnover in the past 12 months (starting from January 1, 2025, for the previous calendar year) has exceeded CZK 2 million become VAT payers and are required to submit tax reports. This obligation is set out in § 94 of the VAT Act (Zákon č. 235/2004 Sb.).

The CZK 2 million turnover threshold includes only revenue subject to VAT in the Czech Republic.

Key VAT Changes in 2025:

Changes in VAT registration thresholds.
Introduction of a second VAT registration threshold for the first time.
The introduction of the «small enterprise» category.
A new requirement to return VAT to the state if an invoice remains unpaid for more than six months past the due date.

These changes will be discussed in detail in a separate article.

Mandatory VAT Reports:

VAT Return (Přiznání k DPH) – Calculates the total tax amount due.
VAT Control Statement (Kontrolní hlášení DPH) – Provides a detailed breakdown of all VAT transactions.
VAT Summary Report (Souhrné hlášení) – Reports sales of goods or services to other EU countries.

Submission Deadlines:

By the 25th of the following month – If submitted monthly.
By the 25th of the month following the quarter – If submitted quarterly.

All reports must be submitted electronically.

Reports on Social and Health Insurance Contributions (Přehled o platbách pojistného na sociální zabezpečení a zdravotní pojištění)

Employers are required to submit monthly reports on insurance contributions. This obligation is established by the Insurance Act (Zákon č. 589/1992 Sb.).

Submission Deadlines:

By the 20th of the following month – Report to the Czech Social Security Administration (ČSSZ – Česká správa sociálního zabezpečení).
By the 20th of the following month – Report to the relevant health insurance provider (zdravotní pojišťovna).

Reporting to the Czech Statistical Office (Statistické výkazy pro Český statistický úřad, ČSÚ)

Some companies are required to submit financial reports to the Czech Statistical Office (Český statistický úřad, ČSÚ). This requirement is set out in § 10 of the State Statistics Act (Zákon č. 89/1995 Sb.).

Companies subject to this requirement will receive a notification from ČSÚ, specifying the list of reports they must submit and the submission deadlines.

Liability for Non-Compliance with Legal Requirements

Failure to submit financial reports on time, errors in reporting, or complete disregard for legal obligations can lead to fines, additional tax assessments, and even the blocking of bank accounts.

The Czech Financial Administration (Finanční správa) closely monitors compliance with reporting deadlines and imposes penalties for late submissions.

Penalties

1. Annual Financial Statements (Účetní závěrka)

According to § 37b of the Accounting Act (Zákon č. 563/1991 Sb.), companies that fail to submit their annual financial statements on time may face the following fines:

Up to 3% of total assets if the financial statements are not submitted within a year after the deadline.
Up to CZK 500,000 if the violation is deemed serious.

Additionally, companies that do not publish their financial statements in the Collection of Deeds of the Commercial Register (Sbírka listin obchodního rejstříku) may face additional sanctions from the Commercial Register (Obchodní rejstřík).

2. Corporate Income Tax Return (Přiznání k dani z příjmů právnických osob, DPPO)

According to § 250a of the Tax Code (Daňový řád, Zákon č. 280/2009 Sb.), penalties for late submission of a corporate income tax return are as follows:

From 0.05% to 5% of the tax due, but no more than CZK 300,000. Fines up to CZK 1,000 are waived.
From 0.01% to 5% of the tax loss reported, but no more than CZK 300,000. Fines up to CZK 1,000 are waived.

The tax authority may reduce the fine by 50% in two cases:

If the tax return is submitted within 30 days after the deadline.
If the taxpayer has not had any other late filings in the current year at the time the fine is issued.

Late Tax Payment Interest Charges:

If corporate income tax is paid late, interest charges apply. The annual penalty rate is based on the Czech National Bank’s (ČNB) repo rate on January 1 of the calendar half-year, plus 8 percentage points. As of January 1, 2025, this rate is 12% per year. The penalty accrues until the tax is fully paid.

3. VAT Return (Přiznání k DPH) and VAT Control Statement (Kontrolní hlášení DPH)

Penalties for late VAT reporting and tax payment are similar to those for corporate income tax and apply to all types of tax reports. However, specific penalties exist for the VAT Control Statement under § 101j of the VAT Act (Zákon č. 235/2004 Sb.):

CZK 1,000 – If the control statement is submitted late but without a reminder from the tax authority.
CZK 10,000 – If the statement is submitted after receiving an official reminder from the tax authority.
CZK 50,000 – If the report is submitted with significant delays or after multiple reminders.
Up to CZK 500,000 – If the tax authority deems the violation intentional or the company ignores legal obligations.

Tax Audits and Account Freezing

If the tax administration identifies serious violations, it may initiate a tax audit (Daňová kontrola). During the audit, inspectors analyze the company’s accounting records, bank statements, and supporting documents.

In cases of suspected tax evasion, the tax authority may impose:

Estimated Tax Assessment (Doměřená daň) – If a company fails to submit reports, the tax is calculated based on data from previous years or industry benchmarks.
Temporary Freezing of Bank Accounts – If a company fails to pay taxes or refuses to cooperate with tax authorities.

In severe cases, the tax authority may petition the court to dissolve a company due to repeated violations.

Liability for Violating AML Regulations

Companies subject to Act No. 253/2008 Sb. on anti-money laundering (AML zákon) must comply with financial monitoring requirements. Failure to meet these obligations can result in severe penalties.

Common AML Violations:

Failure to implement a Know Your Customer (KYC) procedure for clients.
Ignoring beneficial ownership identification requirements.
Not reporting suspicious transactions to regulators.

Sanctions:

Fines up to CZK 10 million for non-compliance with AML regulations.
Freezing of bank accounts upon request from the regulator.
Revocation of business licenses for repeated violations.

As of January 1, 2025, the list of AML-obligated entities has been expanded to include independent accountants, and all AML-obligated entities are now required to register a designated contact person in the AML register.

For more details, refer to our article «New AML Obligations.«

What to Do If You Miss the Reporting Deadline?

If you are unable to submit your financial reports on time, there are several options to mitigate the consequences:

Request a deadline extension – In some cases, the deadline can be extended until the end of September.
Engage a tax consultant – If a certified tax advisor handles your report, the deadline is automatically extended until July 1.
Submit a provisional report – You can file a zero report or submit an incomplete report by the deadline and later file a corrected version. This helps avoid late submission penalties.

Comprehensive Financial Reporting with DoMyTax – No Errors, No Delays

If you are unsure whether your company’s financial statements are correctly prepared, or if reporting deadlines cause stress, you are not alone. Many entrepreneurs in the Czech Republic face challenges such as: