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Taxation in Czech Republic

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Taxation in Czech Republic

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Taxation in Czech Republic

All newly established legal entities, including branches of foreign entities, must register with the tax authorities within 30 days of registration in the Commercial Register. Foreign entities establishing a permanent establishment (for which commercial registration is not required) must also register with the Tax Office for tax purposes.

In its main features, the taxation system in Czech Republic is similar to the systems of developed - especially European - countries.

Income Tax

Personal income taxation in the Czech Republic is a flat rate of 15%.

Corporation Tax

Corporate income tax has a rate of 19%.

Real Estate Tax

Real estate tax is levied on land and buildings. The tax on land depends on the quality of particular land, its location and use. The tax on buildings is not based on market value but on physical characteristics (according to the appertaining law), with its price being used only when it is higher than the price computed according to the law. The taxation period is one calendar year.

Road Tax

Road tax is imposed only on vehicles used for business purposes. Vehicles used exclusively for personal purposes are exempt. Tax rates are assessed as annual fixed rates. For passenger cars, the rate depends on cylinder capacity and for trucks on the number of axles and on weight. There is also a special highway fee. This fee is paid by anyone who uses a highway. The rates of inheritance tax and gift tax range from 0.5 to 40 per cent. These depend on the relation between inheritor/donor and acquirer (heir/donee).

There are also several administrative and local fees.

VAT

Value added tax is charged on most supplies in the territory of the Czech Republic as well as on imported goods. The tax has a basic rate of 21 per cent and reduced rate of 10/15 per cent. The basic rate is imposed on the majority of goods, excluding e.g. food and goods for social and health care purposes and on some services. The reduced rate is imposed on the majority of services, excluding, e.g., advertisements, marketing studies or certain tourism-related services. Exported goods are exempt from tax with possibility of claiming a VAT refund paid on input. Financial services are also exempt. The registration threshold for mandatory registration is set at 3 million CZK of a taxpayer's annual turnover. The tax is paid monthly or quarterly depending on the turnover of the taxpayer.

Other taxation in Czech Republic

Excise duties are imposed on mineral oils, liquors, wine, beer, and tobacco products. Taxes have fixed rates per physical unit (except cigarettes). The tax is paid when goods are produced or imported to the Czech Republic.

Exporters may claim a refund. The taxation period is one month, with big producers paying the tax daily.

Customs duties at an average effective rate of 1.1 per cent respect international contractual obligations of the Czech Republic.

Real property transfer tax has a rate of 5 per cent. The tax base is set as in the case of real estate tax. The tax is paid by the transferor (seller).

Other indirect taxes include, e.g., environmental fees for air and water pollution and waste deposit fees.

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