Annual tax reconciliation for employees explained

For many employees, the annual tax reconciliation is a convenient alternative to filing a tax return themselves. In this article we explain the annual tax reconciliation for employees in simple, practical terms, including who can request it and what to watch out for. Thanks to it, many employees avoid having to fill in a tax return and still settle their tax correctly. Let us look at how it all works and what it requires of you.

What the annual tax reconciliation is

It is the settlement of income tax on income from employment (dependent activity), carried out on the employee’s behalf by their employer. The tax withheld from the employee’s individual wage payments during the year is compared with their total annual tax liability. This comparison results either in an overpayment, which is refunded, or in an underpayment, which is deducted.

Who can request the reconciliation

An annual tax reconciliation can be requested by an employee who had only employment income during the year and meets the statutory conditions. It is the most convenient way to settle your tax without having to fill in the tax return form yourself.

• They received only income from employment
• They had no income that requires a tax return to be filed
• They asked the employer within the set time limit

When a tax return is needed instead

If the employee also had other types of income during the year, for example from business, rental, the sale of assets or from abroad, the annual tax reconciliation is not enough and a tax return must be filed. The same applies if the employee did not ask their employer for the reconciliation in time or did not provide the necessary documents.

What to prepare

So that the employer can take all entitlements into account, the employee submits a request for the annual tax reconciliation together with the necessary documents. Without them it is not possible to claim, for example, the non-taxable portions of the tax base or the tax bonus for a child.

• Income certificates from other employers
• Supporting documents for the non-taxable portions of the tax base
• Supporting documents for claiming the tax bonus

How the settlement works

Based on the documents provided, the employer calculates the final tax, takes all the entitlements claimed into account and reflects the result in one of the subsequent wage payments. Any overpayment is refunded to you, whereas any underpayment is deducted from your wage. Check the deadlines for submitting the request and for carrying out the reconciliation for the year concerned, as they are fixed by law. After carrying out the reconciliation, the employer issues you with a document showing how the resulting tax was calculated and whether there was an overpayment or an underpayment. Keep this document, as it may come in handy, for example, when dealing with other official matters.

Advantages and common mistakes

The annual tax reconciliation is convenient mainly because the employer takes over the paperwork for you. Mistakes most often arise from documents that are incomplete or submitted late, or from the employee not requesting the reconciliation at all. If you have any doubts about your situation, it is better to seek advice in advance. Also consider whether the annual tax reconciliation is worthwhile for you at all, or whether it would be more advantageous to file a tax return yourself. In some cases, a separate tax return makes it possible to claim entitlements that would otherwise remain unused.

Related articles: Advance income tax payments: when and how much to pay, Tax bonus for a child: who is entitled and how to claim it, Minimum corporate income tax: who it applies to.

Frequently asked questions

Do I have to file a tax return if my employer carries out my annual tax reconciliation?

No. If you had only employment income and requested the annual tax reconciliation in time, you do not have to file a tax return. A tax return is needed where there are other types of income.

By when can I request the annual tax reconciliation?

The request must be delivered to the employer within the statutory time limit after the end of the year. Check the exact deadline for the period concerned and provide all the necessary documents.