What documents are required for the preparation of the CIT?

Some might believe that an Excel spreadsheet listing income and expenses is enough. Unfortunately, it is not that simple. Legal entities in the Czech Republic are required to maintain double-entry bookkeeping, and properly maintained accounting and its outputs serve as both the basis for and a mandatory attachment to the tax return.

What is needed?

1. Financial Statements

Before you or we start filling out the form together, you must have your accounts closed. This includes:

• Balance sheet in full or abbreviated scope.
• Profit and loss statement (P&L).
• Notes to the financial statements, explaining significant items and events.

2. Asset Records and Depreciation

This is where the most common differences arise between what is recorded in the accounting and what the Income Tax Act dictates.

• Fixed asset cards including the depreciation schedule.
• Overview of accounting vs. tax depreciation (tax depreciation is what you need to reduce your tax liability).

3. Items Adjusting the Tax Base

Accounting profit rarely equals the tax base. You will need to provide:

• Non-tax-deductible expenses
• Reserves and provisions
• Exempt income (e.g., dividends from subsidiaries)

4. Specific Documents

• Loan and credit agreements: For thin capitalization testing and interest analysis.
• Documents for tax-deductible items: Confirmations of donations, tax losses from previous years, etc.