Last partial update, February 2024.
Czech Republic Tax Rates 2024
The Czech income tax rate for individual's income in 2024 is flat, a 15% rate.A tax rate of 23% applies to income exceeding 48 times the average salary.
Czech personal tax rates 2024:
| Income (CZK) | % |
|---|---|
| 1-1,582,812 | 15 |
| Over 1,582,812 | 23 |
Investment funds pay 5% corporate tax.
The rate of corporation tax is reduced constantly to encourage economic activity, so that for instance, the rate of corporation tax in 1992 was 45% as compared to the present rate of 19%.
Czech Republic Taxation of Individuals
An individual pays tax on his income as a wage earner or as a self-employed person.Tax for an individual who meets the criteria of a "permanent resident" of the Czech Republic is calculated on his income earned inside the Republic and abroad.
A foreign resident who is employed in the Czech Republic pays tax only on income earned in the Republic.
An employer is bound to deduct, immediately on a monthly basis, the requisite tax from employees salaries.
A self-employed person must prepay taxes that will be offset on making an annual tax return.
The advances are determined on the basis of the previous year's tax return.
In the case of a new business, the prepayments are calculated on the basis of estimates made by the owner of the business.
Certain payments are deductible from taxable income as will be specified later.
Czech Republic Reporting Dates
The tax year in the Czech Republic is the calendar year ending on December 31.If your income is derived solely from a salary, you are not bound to file a yearly return.
In all other cases, the annual return must be submitted by March 31 (3 months after the end of the tax year).
If you are represented by an authorized Czech tax advisor, you may make an application to submit the return by June 30.
A delay in submitting an annual return will entail fines, in most cases, of 10% of the tax payable.
Fines are imposed even after tax has been prepaid.
Czech Republic Corporate Tax
- Czech Republic Corporate tax in 2024 is 21%.
- A tax of 15%/35% is imposed on dividends paid by Czech corporations.
- Dividend paid between 2 Czech companies is tax exempt subject to certain terms.
- Income from interest is deemed ordinary income and as such is taxed at 19%.
Czech Republic Capital Gains
- In general, capital gains in the Czech Republic are taxed as income for companies.
Individuals pay generally 15% or 23% on their capital gains. - Capital gains from sale of shares by a company owning 10% or more is entitled to participation exemption under certain terms.
- For an individual, gain from sale of main private dwelling, held for at least 2 years is tax exempt.
Or,when not used as main residence, if held for more than 5 years.
Czech Republic Depreciation of Fixed Assets
The regulations on depreciation were amended in 1999 to enable a company to depreciate an asset over a shorter period than in the past.As a general rule, the classes of fixed assets are divided into 6 groups (categories).
| No. of years of depreciation | Class of fixed asset | Category |
|---|---|---|
| 3 | Automobiles and buses Computers Office equipment and machines |
1 |
| 5 | Machinery & equipment Trucks & tractors Non-tangible rights |
2 |
| 10 | Motors and metal structures Industrial & agricultural machinery & equipment Ships Elevators |
3 |
| 20 | Gas & oil pipelines Water distribution systems |
4 |
| 30 | Buildings Bridges Roads and canals |
5 |
| 50 | Office buildings, Hotels | 6 |
The company may select either the straight line or the accelerated method of depreciation. However, during the period of depreciation, the company may not alter the method of depreciation. Similarly, should the ownership of the asset change during the period of depreciation, the new purchaser may not alter the method of depreciation that was selected by the original owner.
Czech Republic Losses
In the Czech Republic losses can be carried forward for 5 years.There is carryback of losses for two years up to CZK 30 million.
Czech Republic Consolidated Account
Consolidated tax returns are not allowed in the Czech Republic.Czech Republic Thin Capitalisation
Financial expenses related to loans from related parties are not tax deductible when the loan to equity ratio exceeds 4:1 (6:1 for banks and insurance companies).Czech Republic Deduction of Tax at Source
Czech Republic Social Security:Mandatory social and health insurance payments are:
Employer - 33.8%.
Employee - 11.6%.
Self employed pay mandatory 42.7% for social security and health insurance.
Czech Republic Other Deductions
Tax is deducted at source from the following payments to non-residents:Dividends-15%/35%.
Royalties-15%/35%.
Interest-15%/35%.
Technical Fees – 15%/35%.
Note:
Payment of dividend between EU companies, subject to conditions, is exempt from withholding tax.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
Please read our terms of service before entering this site.