Last partial update, February 2025

Czech Republic Tax Overview (2025)

Individual Income Tax:

• Tax Rates: The Czech individual income tax rates are progressive. The specific tax brackets and rates should be verified with the tax authorities, as they have likely changed since 2024.
• Tax Residency: Residents are taxed on their worldwide income, while non-residents are taxed only on Czech-source income.
• Salary Income: Employers are required to withhold income tax and social insurance contributions from employee salaries.
• Self-Employed Income: Self-employed individuals are required to make advance payments of income tax.

Corporate Income Tax:

• Tax Rate: The standard corporate income tax rate should be verified with the tax authorities, as it may have changed.
• Investment Funds: The corporate tax rate for investment funds should be verified with the tax authorities.

Capital Gains:

• Individuals: Capital gains are generally taxed as part of individual income.
  The specific tax rates and any exemptions should be verified with the tax authorities.
• Corporations: Capital gains are generally taxed as part of corporate income.
  The specific rules and exemptions should be verified with the tax authorities.

Reporting Dates and Payment:

• Tax Year: The tax year is the calendar year (ending December 31).
• Individual Income Tax: Tax returns are typically due by March 31st of the following year.
  The deadline may be extended if represented by a tax advisor. Verify the exact deadlines.
• Corporate Income Tax: Companies must file their tax returns by a specified date.
  The specific deadlines should be verified with the tax authorities.
• Penalties: Penalties are imposed for late filing of tax returns.
  The specific penalty amounts should be verified with the tax authorities.

Dividends:

• Individuals: Dividends received by individuals are generally subject to withholding tax.
  The specific withholding tax rate should be verified with the tax authorities.
• Corporations: Dividends received by Czech companies from other Czech companies or from EU companies under the Parent-Subsidiary Directive may be exempt.
  The specific conditions and rules should be verified with the tax authorities.

Interest Income:

• Taxation: Interest income is generally taxed as ordinary income.
  The specific tax rates and any exemptions should be verified with the tax authorities.

Depreciation of Fixed Assets:

• Depreciation Methods: Companies can choose between the straight-line and accelerated depreciation methods.
  The specific depreciation rates and asset categories should be verified with the tax authorities, as they have likely changed.
• Consistency: The chosen depreciation method must be consistently applied throughout the asset's useful life.

Losses:

• Loss Carryforward: Losses can be carried forward for a specified number of years.
  The exact number of years should be verified with the tax authorities.
• Loss Carryback: The rules regarding loss carryback should be verified with the tax authorities, as they can change.

Consolidated Returns:

• Consolidation: Consolidated tax returns are not allowed in the Czech Republic.
  Each company must file its own separate tax return.

Thin Capitalization:

• Rules: Thin capitalization rules apply to interest expenses on loans from related parties. The specific debt-to-equity ratios should be verified with the tax authorities.

Deduction of Tax at Source (Withholding Tax):

Payments to non-resident companies may be subject to withholding tax.

• Dividends: The withholding tax rates should be verified with the tax authorities.
• Royalties: 15% (35% for royalties paid to residents of non-EU and non-EEA countries with which the Czech Republic does not have an enforceable DTT or TIEA in place)
• Interest: The withholding tax rates should be verified with the tax authorities.
• Technical Fees: The withholding tax rates should be verified with the tax authorities.

Social Security:

• Contributions: Both employers and employees are required to make social security contributions.
  Self-employed individuals also contribute.
  The specific rates and contribution bases should be verified with the Czech Social Security Administration.

Key Updates and Considerations:

• Tax Laws are Subject to Change: Czech Republic tax laws and regulations are subject to frequent updates and amendments.
  It is crucial to verify the latest information with a qualified tax advisor or by consulting official Czech tax sources.
• Professional Advice: Tax regulations in the Czech Republic can be complex.
  It is highly recommended to seek professional advice from a tax specialist experienced in Czech tax law for specific guidance on your situation.