Ready to start a business in the Czech Republic? Our local tax experts have summarised 10 key facts you should consider when it comes to the Czech tax system. For a more complex overview, we recommend to take a look on our Tax guideline for 2023.
CIT IN THE CZECH REPUBLIC
19%
Is the rate of the corporate income tax
5%
Is the rate of basic investment funds
0%
Is the rate of pension funds
CIT EXEMPTION
- Dividends paid by a subsidiary (CZ or another EU Member State resident) to its parent company (CZ or another EU Member State resident).
- Income from sale of participation in a subsidiary (CZ or another EU Member State resident).
- Dividends and income from sale of participation in a subsidiary if the subsidiary is a non-EU resident from a “double tax treaty” country and is subject to corporate income tax which is not lower than 12%.
WITHHOLDING TAX
15%
For payment to EU/EEA
35%
For payment outside EU/EEA
Note: Dividends paid by a subsidiary to parent company, that holds 10% share uninterrupted in the past 12 months, are exempt from taxation. Interest and Royalties could be also a tax exempt under the implemented EU directive.
STANDARD VAT IN THE CZECH REPUBLIC
21%
REDUCED VAT IN THE CZECH REPUBLIC
15%
For selected types of goods: food, non-alcoholic beverage, plants, special healthcare products, pharmaceutical products
10%
For selected types of goods and services: infant nutrition, drugs and vaccines, books, water and sewer rates, public transportation, hotel accommodation, catering, entry to cultural and sport events, minor repairs, hairdressing services
PIT IN THE CZECH REPUBLIC
15%
Is the rate of personal income tax for a tax base up to 48 multiple of the average wage
23%
Is the rate of personal income tax for a tax base exceeding the limit
For 2023 the limit is CZK 1,935,552 or EUR 80,648 per year
SOCIAL SECURITY AND HEALTH INSURANCE CONTRIBUTIONS – EMPLOYEE
11%
6.5% Social security, applied up to annual cap
4.5% Health insurance
SOCIAL SECURITY AND HEALTH INSURANCE CONTRIBUTIONS – EMPLOYER
33.8%
24.8% Social security, applied up to annual cap
9% Health insurance
PIT EXEMPTION
- Sale of house or flat, if the seller has a permanent residence for min. 2 years before the sale
- Sale of immovable asset, when the period of ownership exceeded 5/10 years before the sale
- Sale of movable property, with exceptions
- Sale of a share in a LLC, if the share was held for at least 5 years before the sale
- Sale of securities, if held for min. 3 years before sale or if total income is less than CZK 100,000, i.e. EUR 4,160
- Pensions up to CZK 622,800, i.e. EUR 25,950
TAX LOSSES
Losses generated from independent activities and rental activities may be set off against all types of income, except the employment income.
2 years
Standard carry-back period, max. amount of CZK 30 million
5 years
Standard carry-forward period
