Living and working abroad offers exciting opportunities, but it also brings new financial responsibilities. For many Czech citizens who have relocated to the United Kingdom for employment, freelance work, or business, one of the most confusing issues is taxation—particularly when income is earned across borders. The question most often asked is: “Do I have to pay tax twice—once in the UK and once in the Czech Republic?”
Fortunately, the answer is usually no, thanks to an international framework designed to prevent this situation. This article provides a formal, detailed overview of how Czech citizens in the UK can avoid double taxation, understand their tax obligations, and remain compliant under both countries’ laws.
Understanding Double Taxation
Double taxation occurs when an individual is required to pay tax on the same income in two different countries. For example, a Czech freelancer living in London who earns income from Czech clients may find that both HM Revenue and Customs (HMRC) and the Czech tax authorities expect a share of that income. Without legal relief, this could result in paying twice on the same earnings.
To address this, the United Kingdom and the Czech Republic signed a Double Taxation Agreement (DTA). This treaty ensures that income and capital gains are taxed only once, or that one country gives credit for taxes paid in the other.
The UK–Czech Double Taxation Agreement (DTA)
The UK–Czech DTA is a bilateral treaty that sets out which country has the primary right to tax certain types of income. Its main purpose is to:
-
Prevent double taxation on income and gains.
-
Clarify tax residency rules.
-
Encourage the free movement of people and capital between the two nations.
-
Provide a framework for resolving tax disputes.
Key Provisions of the DTA
-
Employment Income: Generally, salaries and wages are taxable in the country where the work is performed. Therefore, if a Czech citizen works physically in the UK, HMRC has the right to tax that income.
-
Freelance or Business Income: Self-employed individuals are usually taxed where they perform their work unless they have a “permanent establishment” (such as an office) in the other country.
-
Dividends, Interest, and Royalties: These are typically taxable in the country of residence, though the source country may withhold a limited percentage.
-
Pensions and Social Security: These are typically taxed in the country of residence but may vary depending on their origin.
-
Real Estate Income: Rental or property income is generally taxable in the country where the property is located.
By understanding which nation has taxing rights, Czech citizens can correctly file and claim reliefs under the DTA.
Determining Your Tax Residency
Tax residency is one of the most crucial factors in deciding where you owe tax. The UK uses the Statutory Residence Test (SRT) to determine an individual’s tax status.
Under this test, several elements are considered, including:
-
The number of days spent in the UK during a tax year.
-
The individual’s main home or place of employment.
-
Family ties or economic connections to the UK.
A Czech national who spends 183 days or more in the UK in a tax year (6 April to 5 April) is automatically considered a UK tax resident. If fewer than 183 days are spent in the UK, other criteria determine whether residency applies.
Czech tax residency, meanwhile, is typically based on having a permanent home in the Czech Republic or spending more than 183 days there.
If you are considered a tax resident in both countries, the tiebreaker rules within the DTA determine where you are treated as resident for tax purposes. These rules examine factors such as the location of your permanent home, your centre of vital interests, and habitual abode.
Declaring Income in Both Countries
Even with a double taxation agreement, you may still need to declare income in both countries, though you will not pay tax twice.
For example:
-
A Czech freelancer who lives in the UK but receives payments from Czech clients must report that income to HMRC under the UK’s Self-Assessment system.
-
The same income might also need to be declared on a Czech tax return, but you can claim relief for the tax already paid in the UK.
The UK’s Self-Assessment System
Self-employed individuals and freelancers in the UK must register with HMRC and file a Self-Assessment tax returneach year, typically by 31 January following the end of the tax year.
You will need to declare:
-
UK and foreign income.
-
Business expenses and deductions.
-
Contributions to pensions or other eligible reliefs.
Tax relief can then be claimed under the DTA to avoid paying twice on the same earnings.
Claiming Relief from Double Taxation
There are two main methods to claim relief from double taxation:
-
Exemption Method: One country agrees not to tax certain income that is already taxed in the other country.
-
Credit Method: You pay tax in both countries, but the country of residence provides a credit for the tax paid abroad.
For Czech citizens in the UK, the credit method is most common. This means you pay UK tax first and then deduct that amount from your Czech tax liability (or vice versa), depending on your residency and the type of income.
Example:
A Czech freelancer living in Manchester earns £30,000 from UK clients and £10,000 from Czech clients.
-
The £30,000 is taxed in the UK under UK law.
-
The £10,000 from Czech clients might be taxed in both countries, but under the DTA, the freelancer can claim credit in the Czech Republic for UK tax already paid on that income.
This ensures that only the higher of the two rates applies overall.
Avoiding Common Mistakes
Even with a DTA in place, errors are common among expatriates and freelancers. Some of the most frequent mistakes include:
-
Not registering for UK Self-Assessment: Freelancers must register with HMRC within three months of starting self-employment.
-
Failing to declare overseas income: Even if tax was paid abroad, HMRC must still be informed.
-
Ignoring currency conversion rules: Income earned in euros or Czech koruna must be converted into pounds sterling at official exchange rates for UK returns.
-
Overlooking expenses: Many deductible expenses—such as office supplies, travel, or professional fees—are often missed.
-
Missing deadlines: Late filing or payment can result in penalties and interest charges.
Seeking professional guidance can help avoid such costly oversights.
Social Security Contributions
Another consideration for Czech citizens working in the UK is social security.
Under EU rules and the UK–EU Trade and Cooperation Agreement, you normally pay social security contributions in the country where you work.
However, exceptions apply for individuals temporarily working abroad (“posted workers”). In such cases, you can remain covered under the Czech system for a limited period if you hold an A1 certificate from Czech authorities. This certificate must be presented to your UK employer or HMRC to prove exemption from UK National Insurance contributions.
The Importance of Accurate Record-Keeping
To claim tax reliefs and prove compliance, maintaining accurate financial records is essential. Freelancers and employees alike should retain:
-
Invoices and receipts for all income and expenses.
-
Bank statements and exchange rate records.
-
Evidence of tax paid abroad.
-
Residency and employment contracts.
-
Certificates from tax authorities (such as A1 or DTA confirmation letters).
These documents not only simplify filing but also protect against audits or disputes.
When to Seek Professional Advice
International taxation can be complex, especially when income flows between the UK and the Czech Republic. Misinterpreting residency rules or failing to claim available reliefs can lead to overpayment—or, worse, non-compliance penalties.
Engaging a qualified tax specialist is strongly recommended, particularly if you:
-
Have dual income from the UK and Czech Republic.
-
Operate as a freelancer or business owner with clients in both countries.
-
Own property, receive pensions, or earn investment income abroad.
-
Have recently moved and are unsure of your residency status.
For individuals seeking professional guidance, consulting a firm such as My Tax Accountant can help ensure accurate filings, optimise tax positions, and provide clarity on cross-border obligations.
Preparing for the UK Tax Year-End
The UK tax year ends on 5 April, with the Self-Assessment deadline falling on 31 January of the following year. Czech freelancers and employees should use the months leading up to the deadline to:
-
Gather all income and expense documentation.
-
Check for any eligible deductions (e.g. business costs, pension contributions).
-
Review exchange rate calculations.
-
Confirm whether tax relief under the DTA applies.
-
Submit the return and pay any tax due before the deadline to avoid penalties.
The Role of Transparency and Compliance
The UK’s tax system places a strong emphasis on self-declaration and honesty. HMRC routinely cross-checks information through international data-sharing agreements. Attempting to hide income or omit foreign earnings can lead to investigations and severe penalties.
Conversely, maintaining transparency and seeking legitimate tax relief under the DTA not only reduces tax burdens but also establishes a trustworthy record with authorities—protecting both your finances and reputation.
Conclusion
For Czech citizens living and working in the United Kingdom, understanding and managing cross-border taxation is crucial. The UK–Czech Double Taxation Agreement provides a solid foundation to prevent paying twice on the same income—but it requires careful application of the rules, accurate record-keeping, and timely filing.
Whether employed, self-employed, or managing income from multiple countries, Czech nationals should ensure they know where they are tax resident, how their income is classified, and which reliefs apply. By doing so, they can remain compliant, avoid unnecessary costs, and make the most of their financial opportunities abroad.
Professional advice can be invaluable in this process. With careful planning and a solid understanding of the DTA, Czech freelancers and employees can truly pay fairly—not twice.
