In 2014, working old-age pensioners (employees or self-employed) may once again claim a personal tax credit.
Taxpayers receiving an old-age pension may again claim a personal tax credit (“basic tax credit”) following a judgment of the Constitutional Court of 10 July 2014 (File No. Pl. ÚS 31/13), which was promulgated in Collection of Laws No. 162/2014 on 4 August 2014.
The monthly tax credit may be claimed by old-age pensioners who are employees. They can do so for the first time for August 2014. This applies to employees receiving an old-age pension throughout 2014, i.e. those who were old-age pensioners as at 1 January 2014 and could not claim the basic tax credit.
Below we summarise steps required for employed pensioners, self-employed pensioners and employers to claim the basic tax credits.
Old-age pensioner – employee
- If the employee has signed the ‘Statement of the taxpayer of personal income tax on employment’ (“PIT Statement”) for the 2014 tax period and claimed the basic tax credit (by ticking the “I am making a claim” option), but the basic tax credit has not been taken into account by the employer on the grounds that the employee receives an old-age pension, the employee is not required to claim the tax credit again. This request is already reflected in the PIT Statement.
- If the employee has signed the PIT Statement for the 2014 tax period and has not claimed the basic tax credit due to being a recipient of an old-age pension (by ticking the “I am not making a claim” option), the employee must inform his/her employer that s/he wishes to claim the tax credit. This change, along with the date it is made, must be marked in the PIT Statement.
Taxpayer (old-age pensioner) filing a PIT return
- Such taxpayers will claim the basic tax credit, in a single payment for the whole year, in the 2014 tax return.
- The employer will claim the basic tax credit itself if the taxpayer has signed the PIT Statement for 2014 and claimed the basic tax credit that has not been granted to the taxpayer due to the old-age pension.
- The employer will claim the basic tax credit for the employee in the month following the month in which the employee notifies the employer of the change (the basic tax credit was not claimed by the employee when signing the PIT Statement for the 2014 tax period).
- The basic tax credit may be claimed by the employer for an old-age pensioner for the first time for August 2014, which is the month in which the judgment of the Constitutional Court was promulgated in the Collection of Laws.
- In connection with the judgment and the basic tax credit claimed by the employee, the employer will not proceed under Section 38i of the Income Taxes Act, i.e. the employer will not retroactively calculate income tax prepayments for previous months of the 2014 tax period. However, the basic tax credit will be claimed in full if the employee requests an annual income tax statement for 2014.
Please note that if a person administering a decedent’s estate files an income tax return in 2014 within 3 months of the day of the decedent’s death and does not claim the basic tax credit, the basic tax credit may be claimed, through an additional tax return, from 4 August 2014.
The judgment of the Constitutional Court only applies to the 2014 tax period. For 2013, old-age pensioners are not permitted to file any additional tax return, and the basic tax credit will not be available.
I would be happy to provide more details if you have any questions.