Get free access to
Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.
Check out our Newsroom to see what is included!
We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.
Unable to subscribe? Try this page.
Our free VAT calculator for Romania can be used to convert the amounts that appear on invoices, using the current VAT rates. In Romania, three VAT rates are applied (19%, 9%, 5%), depending on the nature of the goods & services and company’s CAEN (activity areas) codes.
19 % is the basic VAT rate in Romania.
The reduced rate of 9% applies to:
The reduced rate of 5% applies to:
Our VAT calculator for Romania has been set for simulation purposes only and may not cover all the factors that determine the calculation of VAT, according to Romanian legislation. Accace is not responsible for the actions taken by any natural or legal person, based on calculations made using this VAT calculator. Before taking action, we highly recommend that you consult a VAT or tax specialist.
Take a look on our handy 2025 tax calendar for Hungary, prepared by our local tax experts, to have your main statutory filing obligations at a hand’s reach.
To learn about further details regarding taxation in the country, take a look at our latest 2024 Tax guideline for Hungary for a more thorough overview.
Missing a deadline can lead to penalties, but with Accace, you stay one step ahead. Our local experts offer tailored support for filings, planning and advisory, helping you meet every requirement in line with the Romanian tax calendar. Explore our full range of tax advisory and compliance services in Hungary.
January 13
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
January 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of VAT return and payment of VAT for the previous tax period for taxpayers with a quarterly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar quarter
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of innovation contribution resulting from the tax return of the previous year
Motor vehicle tax
Submission of quarterly tax return on company car tax and payment of the tax resulting from the quarterly return
Green tax / EPR
Submission of quarterly green tax and EPR (Extended Producer Responsibility) return
February 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
February 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
February 25
VAT
Submission of VAT return and payment of VAT for the previous tax period for taxpayers with annual tax obligation
March 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
March 17
Income tax
Advance payment of local business tax resulting from the tax return of the previous year
March 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
April 14
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
April 15
Motor vehicle tax
Payment of yearly motor vehicle tax determined by the local government
April 22
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of VAT return and payment of VAT for the previous tax period for taxpayers with a quarterly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar quarter
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of innovation contribution resulting from the tax return of the previous year
Motor vehicle tax
Submission of quarterly tax return on company car tax and payment of the tax resulting from the quarterly return
Green tax / EPR
Submission of quarterly green tax and EPR (Extended Producer Responsibility) return
May 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
May 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
June 2
Income tax
June 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
June 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
July 14
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
July 21
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of VAT return and payment of VAT for the previous tax period for taxpayers with a quarterly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar quarter
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of innovation contribution resulting from the tax return of the previous year
Motor vehicle tax
Submission of quarterly tax return on company car tax and payment of the tax resulting from the quarterly return
Green tax / EPR
Submission of quarterly green tax and EPR (Extended Producer Responsibility) return
August 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
August 21
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
September 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
September 15
Income tax
Advance payment of local business tax resulting from the tax return of the previous year
September 22
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
October 13
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
October 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of VAT return and payment of VAT for the previous tax period for taxpayers with a quarterly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar quarter
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of corporate income tax resulting from the tax return of the previous year
Quarterly advance payment of innovation contribution resulting from the tax return of the previous year
Motor vehicle tax
Submission of quarterly tax return on company car tax and payment of the tax resulting from the quarterly return
Green tax / EPR
Submission of quarterly green tax and EPR (Extended Producer Responsibility) return
November 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
November 20
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
December 12
Income tax
Submission of tax return on personal income tax and social contribution paid by the employer and payment of tax resulting from the monthly declaration
December 22
VAT
Submission of VAT return and payment of VAT for the previous calendar month for taxpayers with a monthly tax obligation
Submission of EC Sales list for taxable entities which have the obligation to submit the EC Sales list for the calendar month
Income tax
Monthly advance payment of corporate income tax resulting from the tax return of the previous year
What is your monthly net salary when working under permanent employment in Slovakia? Use our 2025 salary calculator for Slovakia and find out more about the taxes and contributions paid by you and your employer. The calculation is based on your gross income and other parameters affecting your monthly paycheck, such as the non-taxable part of the tax base or tax bonus for children. Calculate your indicative net salary now!
This salary calculator for Slovakia has been prepared for general guidance and has been set only for simulation of net income calculation, therefore Accace does not take any responsibility and is not liable for any potential risks or damages caused by taking actions based on the information provided herein.
If you require more specific information related to payroll, income tax or labour law do not hesitate to contact our consultants in Slovakia.
In order to set up a company in Romania, you first need to choose the type of business form, to prepare the file and to submit the application at the Trade Register. Note that the most common forms of business in Romania are the Limited Liability Company along with the Joint Stock Company and Branches.
Our services for company incorporation in Romania are designed to simplify the process of starting a business. We offer tailored service packages to meet your specific needs, ensuring a smooth and hassle-free incorporation experience. Get in touch with us to find out more.
The type of business forms available in Romania are summarized below with their specific information: the minimum share capital, the liability of the shareholders/stockholders, the minimum number of shareholders/stockholders.
The most common forms of business used in Romania are the Limited Liability Company along with the Joint Stock Company and Branches.
Companies can be incorporated by natural persons or legal entities and must register to the territorial Trade Register. Certain activities need prior authorization (e.g. credit institutions, insurance brokers, companies which produce, sell firearms and ammunition, pension entities). Certain activities need to be authorized after the registration of the company (e.g. work agent, transportation).
The main document needed for incorporating a company is the articles of incorporation. This document must specify the following:
company form and name and its registered seat
the company’s business (main) activities (certain activities require special permits)
representation of the company, the method of signing in the name of the company
the duration of the company, if founded for a fixed period of time
the identification data of the shareholders, and in the Limited Partnership will be indicated also the shareholders limited
the amount of the equity capital, the method and date of its availability
shareholders representing and managing the company or non-associated directors, their identification data, the duration of the mandate, the powers conferred on them and whether they are to exercise them jointly or separately
details identifying the beneficial owners and how the company control is exercised, if applicable
all other items relevant to the given form of business as required by the applicable laws in force
The types of documents requested by the Trade Register for the company establishment are:
On the incorporation, the company in registered with the Romanian Fiscal Authorities by submitting the registration request with the Trade Register. However, in order to choose the appropriate tax regime, subsequent formalities with the tax authorities are necessary to be performed.
The incorporation procedure of a Romanian company consists mainly in:
The registration of a company is mandatory in Romania.
After submitting the complete file to the Trade Register, the request is usually processed within one working day from the date of registration of the application. Sometimes, the approval of the file may be delayed, because additional documents/information are requested by the registrar who will handle the request.
The same term applies also for approval of mentions (e.g. update of the Articles of Incorporation, revocation of directors, appointing of directors, relocation of headquarter).
A newly registered company must also register with the Social Security Authorities and Labour Authorities (in case it has employees).
In order to voluntarily liquidate and dissolve a company with the Trade Register, the procedure will take longer than the registration of the company, respectively up to 3 months.
This procedure consists in 2 steps. First, the General Shareholder Meeting resolution or the Sole Shareholder decision will be published in the Official Gazette in order to be brought to the attention of the public and, afterwards, the interested parties may submit an opposition to the liquidation request.
Regarding the shareholders of different forms of companies in Romania:
The Joint Stock Company is managed by one or more directors. Joint stock companies, whose annual financial statements are subject to audit legal obligations, are managed at least by three directors.
The Limited Liability Company is managed by one or more directors, appointed by the Articles of incorporation or by General Meeting of Shareholders or the Sole Shareholder.
As a general rule, the role of the director is performed by a natural person, Romanian or foreign citizen. In its current form, Law no. 31/1990 establishes that a legal person can be appointed as director, but it is required to appoint also a natural person, as representative.
The standard corporate income tax rate in Romania is 16% and the standard VAT rate is 19%.
Romanian taxpayers who meet certain conditions (e.g., at least one employee, a turnover of up to 500,000 euros, consultancy and management activities accounting for a maximum of 20% of total revenues, etc.) may qualify for the microenterprise income tax of 1% on turnover.
Romanian taxpayers that are carrying on activities such as gambling and nightclubs are either subject of 5% rate from the revenues obtained from such activities or 16% of the taxable profit, depending on which is higher.
Besides the VAT 19% rate, the following reduced rates would apply:
VAT registration for taxable persons having the place of business activity in Romania should be performed when the annual turnover of EUR 88,500 (RON 300,000) is exceeded.
Voluntary VAT registration before the threshold is exceeded is also possible. The VAT registration procedure is complex, and several types of documents are required. Non-resident taxable persons established in Romania through fixed establishments and non-residents having no actual presence in Romania can register without observing the above threshold. However, a VAT number must be in place before the commencement of the economic activity.
A taxable person not registered for normal VAT purposes in Romania and not required to register is liable to request the special VAT registration in the following situations:
The incorporation of the company, the mentions or the liquidations are tax free as per Law no. 265/2022.
Amounts for publishing the documents (e.g. resolutions, Articles of incorporation) in the Romanian Official Gazette will apply.
The microenterprise regime is optional and may be enjoyed by all companies obtaining revenues below the threshold of EUR 500,000 computed at the NBR exchange rate valid for the last day of the financial year and met several other criteria (e.g. revenues from consulting and management services lower than 20% out of the total revenues, one minimum employee etc.).
The microenterprise tax rate applicable is 1%.
Companies doing business in Romania could benefit from the following incentives:
Companies may benefit of an extra 50% tax depreciation for the eligible R&D expenses and may also apply the accelerated depreciation for these expenses.
The facility refers to the exemption of corporate tax of the profit re-invested in certain types of assets.
For a Romanian company it is mandatory to have a bank account. For opening a bank account, the legal representatives’ personal presence is mandatory at the opening. In the previous years, the banks also accepted a special notarized Power of attorney for another individual, but this practice changed and usually, at the opening, they request the presence of the administrator of the company.
All modifications regarding the statutory information of the companies (change of registered seat, mandate of directors, change of the shareholders or directors etc.) need to be registered at the Trade Register in 15 days as of the amending deed.
All Romanian companies receive, beside the unique registration number and the Trade Register identification number, the unique European identifier (EUID).
Through the system of interconnection of the Trade Register institutions in Europe, documents and information relating to the professionals registered in the Trade Register of each country are made available to the public. It will be possible to obtain information on identification and status of a company in the European Union and to obtain copies of certificates of electronic documents.
Hungarian legislation follows both European legislation and international trends in the field of labour law while showing characteristics inherent in national regulation.
Employment relations and labour law in Hungary are governed by the Act I of 2012 on Labour Code and other labour law legislation, collective bargaining agreements and individual employment contracts. In the context of labour disputes in Hungary, courts generally protect employees’ rights by interpreting the provisions of the Labour Code, collective bargaining agreements and employment contracts often in favor of the employees. Overall, litigation trends reflect a decrease in the number of lawsuit initiated by blue-collar employees, while more and more white-collar employees, particularly executives and key-employees, are initiating labour disputes against their employers before courts in Hungary.
Employment relationship in Hungary may be concluded for:
Fixed term employment
Indefinite period of time
The period of fixed-term employment in Hungary shall be determined according to the calendar or by other appropriate means. The duration of a fixed-term employment relationship may not exceed five years, including the duration of an extended relationship and that of another fixed-term employment relationship concluded within six months of the termination of the previous fixed-term employment relationship.
A fixed-term employment relationship may be extended, or another fixed-term employment relationship may be concluded within six months from the time of termination of the previous one upon the employer’s legitimate interests. The agreement may not infringe upon the employee’s legitimate interest. If the fixed-term employment relationship is extended or another fixed-term employment relationship is established within six months from the time of termination of the previous one and employment is provided in the same or similar position, no probationary period may be stipulated. If the duration of employment relationship does not exceed twelve months, the length of the probationary period shall be proportionate.
In the absence of an agreement to the contrary, an employment relation is established for an indefinite period of time.
In Hungary, the conclusion of a written employment contract is a pre-requisite to enter into an employment relationship. It is the employer’s obligation to set forth any employment contract in writing.
There are essential items in the contract, which has to be included. The parties of the employment contract must agree, by all means, on both the personal base wage and the position of the employee – these terms are essential under Hungarian labour law.
It is not essential for the parties to set the place of work and the duration of the employment contract (lack of agreement on these issues will not affect the validity of the employment contract and relationship). The place of work maybe a city, a region or a country as well.
If the parties fail to define the place of work, then the place where the employee regularly performs his work shall qualify as the place of work. The term of the employment relationship shall be defined in the employment contract. In the absence of an agreement to the contrary, all employment relations are concluded on general principle for full-time daily employment.
In the absence of an agreement to the contrary, all employment relations are concluded on general principle for full-time daily employment.
Besides the essential and mandatory elements discussed above, the parties may set any other term they wish to provide for in the employment contract. The only thing the parties need to be aware of: such term may not be in violation of statutory labour law.
As a general rule, the employment contract may derogate from the provisions of Part Two and from employment regulations to the benefit of the employee.
In the case of executive employees, the parties are to agree on the terms of employment and there are less minimum terms to observe and apply of the Labour Code.
In the Hungarian employment contract, the parties may stipulate a probation period of not more than three months from the date of commencement of the employment relationship. In the event that a shorter probation period has been stipulated, the parties may extend the probation period once. In either case, the duration of the probation period may not exceed three months.
In either case, the duration of the probation period may not exceed three months.
Probation period could be stipulated in case of fixed term employment and also in case of permanent employment.
Stipulation of probation period shall be included in the employment contract.
Cases of termination of employment depend on the intention of the parties. An employment relationship in Hungary may be terminated in three ways:
by mutual consent
by notice
by dismissal with immediate effect
An employment relationship may be terminated by the employee and the employer by notice. If so, agreed by the parties, the employment relationship may not be terminated by notice for a period of up to one year from the date of commencement of the employment relationship.
Employers must justify their dismissals in writing. The reasons must be clearly specified, authentic and substantial. Reasons of termination by notice may be in connection with the employer’s behaviour in relation to the employment relationship, with the employee’s ability or in connection with the employer’s operations.
The employer shall be permitted to terminate a fixed-term employment relationship by notice:
The notice period shall begin at the earliest on the day following the date when dismissal is communicated.
Where employment is terminated by the employer, the thirty-day notice period shall be extended:
The period of notice for the termination of a fixed-term employment relationship by notice may not go beyond the fixed term. In the event of dismissal the employer shall excuse the employee concerned from work duty for at least half of the notice period. The exemption from work duty shall be allocated in not more than two parts, at the employee’s discretion.
The termination by mutual consent is not regulated by expressed Hungarian Labour Code provisions. Termination by mutual consent allows to the employer and employee to agree freely but in agreement with each other on the conditions of termination.
Employer or employee may terminate an employment relationship without notice if the other party:
The right of termination without notice may be exercised within a period of fifteen days of gaining knowledge of the grounds therefore, in any case within not more than one year of the occurrence of such grounds, or in the event of a criminal offense up to the statute of limitation for criminal liability.
If the right of termination without notice is exercised by a body, the date of gaining knowledge shall be the date when the body, acting as the body exercising employer’s rights, is informed regarding the grounds for termination without notice.
In case of termination without notice, the justification is obligatory for the employer or the employee as well. The right of termination with immediate effect may be exercised, without giving reasons:
In case of termination under point b), employee shall be entitled to absentee pay due for twelve months, or if the time remaining from the fixed period is less than one year, for the remaining time period.
Employers in Hungary are required to pay the following taxes and contributions on the gross salaries of their employees:
| Contribution | Employee | Employer |
| Social contribution tax | – | 13 % |
| Personal income tax | 15 % | – |
| Social security contribution | 18.5 % | – |
| TOTAL | 33.5 % | 13% |
The daily working time in full-time jobs is eight hours (regular daily working time). Work shall be scheduled for five days a week. The daily working time can be increased or reduced.
Based on an agreement between the parties, the daily working time in full-time jobs may be increased to not more than twelve hours daily for employees: working in stand-by jobs, and who are relatives of the employer or the owner (extended daily working time).
Employees in Hungary shall be entitled to have two rest days in a given week.
In case of an irregular work schedule the weekly rest days may be scheduled irregularly as well. Instead of weekly rest days, employee shall be given at least forty-eight hours uninterrupted weekly rest period.
In case of full-time employment, two hundred and fifty hours of overtime work is permitted in a calendar year. Working overtime shall be in writing, if requested by the employee. Upon the agreement between the parties, an additional 150 hours of overtime is acceptable by law.
Overtime work’ shall mean work performed:
The amount of vested vacation time shall be twenty working days. Workers shall be entitled to extra vacation time from 1 to 10 days depending on the age of the employee according to the Labour Code. Parents also entitled to vacation after children (2 days after one, 4 days after two children, 7 days as a maximum per calendar year). Vacation days after children shall be granted on days requested by the employee.
Employees shall be entitled to fifteen working days of sick leave per calendar year for the duration of time during which the employee is incapacitated to work.
Upon the birth of his child, a father shall be entitled to ten working days’ leave at the latest by the end of the fourth month following the birth of the child, or the definitive date of the resolution on adoption if the child was adopted (hereinafter referred to as “paternity leave”), which shall be granted on the days requested by the father in not more than two instalments.
The employee shall be entitled to forty-four working days of parental leave until his or her child reaches three years of age. Parental leave shall be provided after at least one year of employment.
Vacation time shall be scheduled by the employer upon hearing the employee.
With the exception of the first three months of the employment relationship, employers shall allocate seven working days of the vacation time in a given year in not more than two parts, at the time requested by the employee. The employee shall notify the employer of such request at least fifteen days in advance.
Unless otherwise agreed, vacation shall be allocated to contain at least fourteen consecutive days once in a calendar year, where the employee is exempted from the requirement of availability and from work duty.
Unpaid leave can be defined as quasi extraordinary vacation without pay, which is an opportunity, but also there are compulsory cases according to the Hungarian Labour Code.
Employees shall convey the request for leave of absence without pay in writing, at least fifteen days in advance.
In addition to the above unpaid leave also possible by mutual agreement of the employer and employee, however it is not regulated by the Hungarian Labour Code. Employees shall convey the request for leave of absence without pay in writing, at least fifteen days in advance. The leave of absence without pay shall end at the time the employee has indicated, at the earliest on the thirtieth day from the date of delivery of the legal statement for the termination of leave.
The benefits can be systematised by many ways in Hungary, many kinds of benefit have catering purposes, purpose of welfare, or social purpose.
It is also common to give cost contribution by the employer to the employee for example work clothes contribution.
SZÉP Card
Local public transport season ticket
Vouchers – School starting voucher; Culture vouchers; Gift voucher
Health Care Fund Card
Voluntary pension fund additions
Accommodation allowance (from 2025)
The period of fixed-term employment in Hungary shall be determined according to the calendar or by other appropriate means. The duration of a fixed-term employment relationship may not exceed five years, including the duration of an extended relationship and that of another fixed-term employment relationship concluded within six months of the termination of the previous fixed-term employment relationship.
The daily working time applicable for a specific full-time job may be reduced by agreement of the parties (part-time work). The scheduled daily working time of an employee may not be less than four hours, with the exception of part-time work.
Part-time workers employed under employment contract in jobs for up to six hours a day shall work at times deemed necessary to best accommodate the function of their jobs. In this case, the duration of the working time limit may not exceed four months.
Such an employment relationship is established by the fulfilment of the notification requirement of the employer. Not EU citizen shall only be employed in present employment relationship form in the frame of seasonal agricultural work except if he/she is a third-country national with resident or immigrant status.
Number of employees in present form of employment is strictly regulated by the Labour Code. Present form of employment between the same employer and employee shall not exceed 90 days, while simplified employment shall not exceed an overall 120 days per year per employee.
Present employment means when an employee is hired out by a temporary-work agency to a user enterprise for remunerated temporary work, provided there is an employment relationship between the worker and the temporary-work agency (placement).
The duration of assignment may not exceed five years, including any period of extended assignment and re-assignment within a period of six months from the time of termination of his/her previous employment.
Employers shall be entitled to temporarily reassign their employees to jobs and workplaces other than what is contained in the employment contracts, or to another employer.
The duration of employment in present employment form may not exceed a total of forty-four working days or three hundred and fifty-two scheduled hours during a calendar year. This shall proportionately apply if the employment relationship commenced during the year, if it was entered into for a fixed term or in the case of irregular daily working time and part-time work. The employee affected shall be informed of the expected duration of work in derogation from the employment contract.
In some cases, stated in the Hungarian Labour Code employee may not be transferred to work at another location without the employee’s consent.
Struggling with A1 applications? Order their preparation from our eShop.
Understanding and applying labour law in Hungary is essential to maintaining a compliant and productive workplace. At Accace, we provide expert labour law consultancy and payroll services in Hungary to help you manage employment relationships, contracts, internal policies, and day-to-day HR administration. With our support, you can confidently handle your employer obligations while staying aligned with local regulations.
Labour law in the Czech Republic regulates the legal relations arising in connection with the performance of dependent work between employees and their employers, labour relations of collective nature and other aspect related to employment.
The fundamental principles of labour relations are especially legal protection of employee status, satisfactory and safe working conditions for performance of work, fair remuneration and equal treatment of employees and prohibition of their discrimination.
No employment permission needed.
Work Permit – most common in cases of seasonal work, or applicants for international protection etc.
Blue Card – for a long-term stay involving the performance of a highly skilled job
Employee Card – for long-term stay in the territory of the Czech Republic where the purpose of the stay (longer than 3 months) is employment
Intra-Company Transfer Card – for transfer within a group of companies (from a group company outside the EU into Czech Republic), where the purpose of the stay is work (longer than 3 months) as a manager, specialist or employed intern
There are two types of regular employment contracts in the Czech Republic:
Employment Contract for a definite period: generally, it can be concluded for a maximum of 3 years and it is possible to prolong such contract only twice (maximum length 3×3 years)
Employment Contract for an indefinite period: an employment relationship shall last for an indefinite period unless a definite period has been expressly agreed
Furthermore, an employee may perform work outside employment relationship on the ground of two agreements:
Agreement to complete a job: the scope of work for which an agreement is concluded may not exceed 300 hours in one calendar year.
Agreement to perform work: the scope of work shall not exceed a maximum of one half of determined weekly working hours (20 hours)
In Czech employment contracts, the probationary period can be concluded as:
Maximum 3 consecutive months for regular employees
Maximum 6 consecutive months for managers
A probationary period may not be longer than one half of the agreed period of the employment relationship and must be agreed in writing on the day of commencement of employment at the latest.
Employment relationship may be terminated with the Czech employee:
In some specific cases, an employee is entitled to severance pay upon termination of employment.
Where notice of termination has been given, the employment relationship will come to an end upon the expiry of the notice period. The notice period must be the same for both the employer and the employee.
The notice period shall be at least 2 months and can be extended only by agreement between the employer and the employee in writing. The notice period shall start to run on the first day of the calendar month following delivery of the notice.
The length of the notice period is regulated differently for agreements on work outside of an employment relationship. Unless agreed otherwise, the notice period for these agreements is 15 days and starts on the date on which the notice is delivered to the other party.
The employer is obliged to pay monthly contributions to social and health insurance and advances on the income tax.
Social security contribution: 24.8%* of gross earnings
* (from 1 February 2023, it is possible to apply a discount on the contribution of 5% for certain groups of employees, e.g., under 21 years of age, or those with shorter working hours who are over 55 years of age or caring for a child under 10 years of age, etc.)
Health insurance: 9% of gross earnings
Social security contribution: 7.1% of gross earnings
From 2024, employees are paying sickness insurance as part of their social security contributions, at a rate of 0.6% of their gross wages. The employee’s social security contribution will therefore be 7.1% instead of the previous 6.5%.
Health insurance: 4.5% of gross earnings
The personal income tax in the Czech Republic is paid by the employee at a flat rate of 15% applicable on a gross salary up to the annual income of 36x the average salary (i.e. CZK 1,676,052 for 2025).
Income exceeding this limit is taxed at a higher flat rate of 23%.
40 hours/week is the length of standard weekly working hours, except for some employees. Working hours are usually distributed over a five-day working week. Part-time work may be agreed between the employer and employee.
12 hours is the maximum length of a shift. The employer shall distribute working hours and determine the start and end of shifts.
25% of the average earnings is the minimum premium that the employee is entitled to for overtime work in addition to the attained wage, or a compensatory time off.
Besides an evenly distributed work time schedule, employers may also introduce uneven or flexible schedules, as well as a work time account. In addition, from 1 January 2025, the employer may also agree with the employee on the employee´s self-scheduling of working hours, both when working at the employer´s workplace and when performing remote work. Specific requirements are indicated in the Czech Labour Code.
Regarding the vacation and other circumstances under which the Czech employee can take time off, the main cases are:
The employee in an employment relationship who performed work for the employer for 52 weeks in the extent of the weekly working hours (standard or shorter part-time working time) in one calendar year is entitled to annual leave. The basic statutory period of leave is 4 weeks.
The employee who worked for the employer in the extent of the weekly working hours for at least 4 weeks, is entitled to 1/52 of the leave entitlement for each fully worked weekly working time.
The length of additional leave in the Czech Republic is 1 week and it is provided for specific groups of employees engaged in particularly hard work when an employee performs such work for the entire calendar year. In case that this type of work was not performed during the whole calendar year, a proportional part of the additional leave is provided (1/52 of the yearly entitlement for each work week).
As of 1 January 2024, employees working under an agreement for work performed outside the employment relationship (agreement to perform work or agreement to complete a job) are now also entitled to annual leave. The entitlement arises if the employment relationship under the same agreement lasted at least 4 weeks in the relevant calendar year and if the employee worked at least 80 hours. With the statutory 4-week annual leave entitlement, the employee is entitled to approximately 1.5 hours of leave for every 20 hours worked.
Due to family circumstances or for other personal reasons the employee may be given a leave without pay, the duration of which is determined usually under the agreement between the employee and the employer. It is applicable upon request, but in certain cases prescribed by law. For example, the employer is obliged to provide unpaid leave when the employee moves or seeks another employment (both subject to further conditions). In some cases, the employee is even entitled to paid leave (e.g. medical examination, wedding, bereavement).
The most common benefits for employees in the Czech Republic are:
Certain companies offer also temporary accommodation or housing allowances, recreation in the company’s facilities or holiday allowances, or free ticket by companies operating regular public transportation.
* Non-monetary benefits in the field of culture, education, , recreation and trips, etc., which are provided by the employer to the employee or his/her family members, will now be exempt from tax on the employee’s side only up to half of the average monthly salary for the whole calendar year (for 2025 this amount is CZK 23,278).
From 2025 a new limit has been introduced for health related employee benefits. These benefits are exempt from taxation on the employee’s part up to the average wage for the calendar year, i.e. up to CZK 46,557 for the calendar year 2025. The new limit should not replace the current limit for non-monetary benefits provided to employees by the employer up to half the average wage, i.e. CZK 23,278 for the year 2025, it will be monitored separately. The new limit for health benefits will apply to the purchase of goods or services of a health, medical, hygienic and similar nature from health services or the purchase of medical devices based on a medical prescription, e.g. contributions to medicines and prescription glasses, vaccinations, psychological consultations in registered health facilities, etc.
An employment agency temporarily assigns its employee to perform work for a client on the basis of a temporary assignment agreement entered into by and between the agency and the client.
The agreement must be in writing. The employment agency assigns an employee to perform temporary work with the client on the basis of a written order.
The employment agency and the client are obliged to secure that the working and wage conditions for the temporarily assigned employee are not or would not be worse than those under which a comparable employee works or would work.
The time of temporary assignment to perform work for the same client shall not exceed 12 consecutive calendar months, although some exceptions apply.
In case an employee of an employer based in one of the EU member states is sent to work within the framework of the posting of employees in the territory of the Czech Republic, such an employment must comply with the European legislation, as well as that of the Czech Republic.
An A1 certificate is a form that states the country in which an employee is covered by social insurance. In principle, all employees are covered by social security in the country where they work and hence to prove this, employees must carry an A1 certificate.
Inspections in several EU countries are strict and may cause unpleasant situations to the employees and their employers if they do not have A1 certificates.
If the posting is short-term (i.e. up to 12 months), the employment must comply with the following Czech basic work conditions:
In case of long-term postings (i.e. exceeding 12 months), it is necessary to ensure that also any other local work conditions are applicable to the posted employee, with the exception of conditions governing the establishment, changes or termination of an employment relationship.
Local legislation is not applicable if the legislation of the posting country is more favourable to the employee, which is to be considered individually.
The main sources of the labour law in the Czech Republic are three acts:
However, the area of labour law in the Czech Republic is governed by other important regulations, such as:
Understanding and applying labour law in the Czech Republic is essential to maintaining a compliant and productive workplace. At Accace, we provide expert labour law consultancy and payroll services in the Czech Republic to help you manage employment relationships, contracts, internal policies, and day-to-day HR administration. With our support, you can confidently handle your employer obligations while staying aligned with local regulations.
Affecting both domestic and foreign businesses, a number of actions triggers the obligation to register for value-added tax in the Czech Republic. To provide a basic overview, our Czech experts prepared a comprehensive eBook on VAT. Find out more about VAT rates, registration of taxable persons, communication with local tax authorities, compliance and VAT return filing, VAT refund to EU member states or third countries and penalties.
The basic VAT rate in the Czech Republic equals 21%. A reduced VAT rate of 12% is applicable to specific goods, such as food and drinking tap water, special healthcare products or pharmaceutical products (incl. drugs and vaccines), public transportation, hotel accommodation, catering or entry to cultural and sport events.
The supply of goods to another EU member state is exempt from VAT, provided that:
The export of goods outside the EU is exempt from VAT, provided that:
The taxable amount equals the total amount that was received or shall be received for a taxable supply, including any excise duties, however, it does not include the value-added tax.
Voluntary VAT registration is possible, but only for a taxable person. However, if the turnover threshold reaches CZK 2,000,000 within a calendar year, registration for VAT becomes obligatory.
The application for VAT registration must be submitted within 10 working days after the turnover threshold has been reached. In the application, taxable person may decide since when it would be registered as VAT payer:
Once the turnover threshold reaches CZK 2,536,500 a taxable person becomes taxpayer always from the day following the day on which the threshold has been reached.
The due day to file the obligatory VAT registration falls on the 15th day of the calendar month following the calendar month in which the turnover threshold has been reached.
In the Czech Republic, taxable entities who have their seat, place of business or fixes establishment within Czech territory and are financially, economically, and organizationally connected, may participate in group VAT registration, and therefore be considered as a single taxable person for VAT purposes.
In case a taxable person does not fulfil the obligation to register for VAT, the tax authority is entitled to do so ex officio.
Besides the obligatory registration, Czech taxable entities must register for VAT for intra-community purposes in case of service provision to another EU member state or in case of acquisition of goods or services from another EU member state.
Foreign taxable persons are entities without seat or fixed establishment located in the Czech Republic, who realize the delivery of goods or service provisions subject to Czech VAT obligations.
Foreign taxable persons are obliged to register for VAT in the Czech Republic in case they deliver goods or provide services subject to Czech VAT obligations (except when the recipient is obliged to pay the tax) as well as in case of acquisition of goods from other EU member states.
For distance sales the threshold for the relevant transactions (distanced sale of goods and provision of telecommunication services, radio and television broadcasting services and electronically provided services to a non-taxable person), did not exceed EUR 10,000 (approx. CZK 253,000) in the relevant and the immediately preceding calendar year. Alternatively, a single EU VAT return submitted in the OSS (One-Stop Shop) scheme will be an option.
The electronic portal businesses (often participants of distanced sales of goods) selling imported goods to buyers in the EU, might, since 1 July 2021, instead of making the buyer pay the VAT as of import of the goods into the EU, declare and pay the VAT to the tax authorities in IOSS (Import One‑Stop Shop) scheme.
In the Czech Republic, local representation by a tax advisor is not obligatory.
In specific cases, foreign entities are very likely to use the services of a tax advisor.
As of 1 January 2025, foreign entities which do not have a data box are obliged to have an authorized representative for the delivery of documents. Authorized representative should be appointed by the foreign entity no later than
In communication with the Czech tax authorities, only Czech language may be used.
A taxable person can communicate with the tax authorities in written form, verbally to the protocol or electronically via the data box.
The VAT return and EC sales must be filed electronically.
In the Czech Republic, the calendar month is considered as a tax period. A later change to calendar quarter is possible under specific conditions. The VAT return shall be filed until the 25th day following the respective tax period.
The EC Sales List shall be filed until the 25th day following the respective tax period which is in general a calendar month; eventually a calendar quarter.
Besides the VAT return, a control statement listing information from issued and received invoices must be filed as well.
The minimum amount to be refunded is EUR 50 for the respective calendar year. However, the VAT refund may be requested also for shorter periods than the whole calendar year, but such period may not be shorter than 3 calendar months while the value of VAT must exceed EUR 400.
The deadline for filing of the VAT refund request is September 30 of the subsequent calendar year. The request shall be filed with the local tax authority in the other EU member state where the claimant is established. The deadline for the return of claimed VAT is 10 working days after a decision on the VAT refund is issued. This decision is issued between 4 to 8 months after filing the VAT refund request.
VAT refund for a foreign taxable person is possible, upon the fulfilment of specific conditions.
Upon the fulfilment of specific conditions, including reciprocity (currently applicable to Switzerland, Norway, Macedonia, United Kingdom), VAT refund to third countries is possible.
The minimum amount to be refunded is CZK 1,000 for the respective calendar year. However, the VAT refund may be requested also for shorter periods than a whole calendar year, but such period shall not be shorter than 3 calendar months and the value of VAT must exceed CZK 7,000.
The deadline for filing a VAT refund request falls on June 30 of the subsequent calendar year. The request shall be filed with the Tax office in Prague, Czech Republic. The deadline for the return of claimed VAT is 6 months after filing the VAT refund request.
Depending on the specific situation, following penalties can be imposed in case of VAT non-compliance:
Dealing with value-added tax in the Czech Republic can be complex, especially with frequent legislative updates and detailed reporting obligations. Accace offers comprehensive VAT services in the Czech Republic to help you manage VAT registrations, filings, audits, and day-to-day compliance with ease. Our local experts ensure your obligations are met accurately and on time, so you can focus on growing your business with confidence.
Even though prices of real estate are generally steadily increasing in most segments of the Czech real estate market (i.e. residential, commercial, industrial), it is still possible to find opportunities for investments and real estate transactions in the Czech Republic with prospect of solid yields in the following years.
The Czech real estate market remains a promising destination for foreign investors, with several sectors demonstrating resilience and steady performance despite global economic challenges.
The Czech real estate market saw approximately €1.09 billion in transaction volume during the first three quarters of 2024. While this aligns with 2023 levels, the market is notably performing above expectations when compared to some neighbouring countries, showcasing its relative stability in central and eastern Europe. The retail sector accounted for 31% of the total volume, followed by industrial assets at 22% and office properties at 20%. Domestic investors remain active, yet the market’s fundamentals make it increasingly attractive for foreign capital seeking stable returns.
Prague’s modern office space has grown to approximately 3.96 million square meters as of Q3 2024. Despite a slight increase in the vacancy rate to 8.1%, the year-on-year rise in gross take-up by 27% underscores sustained demand from both domestic and international tenants. Prime office rents have remained stable at €30 per square meter per month, reflecting the long-term attractiveness of Prague’s office market for businesses and investors alike.
The industrial real estate sector continues its strong expansion, with the total stock surpassing 12.2 million square meters in 2024. New completions in Q3 alone added 163,500 square meters, and further growth is expected by year-end. While the vacancy rate rose slightly to 3.1%, it remains one of the lowest in Europe, signaling robust demand for high-quality logistics and industrial spaces. Prime industrial rents in Prague have held steady at €7.50 per square meter, offering reliable returns for investors in this segment.
Residential real estate in the Czech Republic shows positive momentum, with the Residential Real Estate Price Index increasing by 1.18% year-on-year in Q1 2024. In Prague, the average price per square meter for residential properties reached CZK 124,900 (€5,409), reflecting a 6.93% annual increase. This price growth, coupled with a projected easing of interest rates, positions the residential market as an attractive option for medium- to long-term investments. Experts predict a gradual recovery in the Czech real estate market during the end of 2024 and Q1 2025, fueled by stabilizing inflation and the expected reduction in interest rates. Foreign investors are particularly well-positioned to capitalize on growth opportunities in retail, residential, and logistics sectors, where demand remains robust and yields remain competitive compared to western European markets.
For a better orientation in the real estate market, we provide you with this brief overview with information on legal aspects related to real estate transactions in the Czech Republic.
There are currently no general limitations on ownership or occupation of real estate by foreign entities or foreign citizens, and this applies to foreign guarantees and security as well.
However, specific limitations could follow from hypothetical economic sanctions imposed by the EU, United Nations or other international organisations of which the Czech Republic is a member. However, such sanctions are extremely rare and very unlikely considering the stability and characteristics of the Czech political and economic situation.
The real estate market in the Czech Republic can be quite confusing for a new investor.
As of 1 January 2014, when the new Civil Code came into force, buildings form part of the land on which they are located. This means that buildings are usually owned by the owner of the land. Buildings also cannot be transferred independently from the land (principle “superficies solo cedit”). This applies to the buildings constructed after 1 January 2014 and to the buildings which had the same owner as the land under the building on 31 December 2013. As always, there are some exceptions to this general rule. But let´s focus on the big picture.
Buildings constructed before 1 January 2014 can be considered as a separate real estate itself. Such a building will remain a separate real estate until it is owned by the same entity as the land under the building.
It has to be pointed out, that for the purpose of a merger of a building with the land under the building, both of the owners have a mutual statutory pre-emptive right, which means the owner of the land has a pre-emptive right to the building and vice-versa.
It is also possible to construct a building on another person’s land (without acquiring the land). This can be arranged by a right to build. Right to build is considered as a separate real estate in a legal sense and as such can be transferred or mortgaged. On the other hand, the building itself is not a separate object and only forms part of the right to build.
All of the information on a real estate can be found in the Cadastre of Real Estate administered by the State Administration of Land Surveying and Cadastre.
Real estate in the Czech Republic (again with certain exceptions such as engineering networks) as well as certain rights to it are registered in the Cadastre of Real Estate.
The Cadastre of Real Estate contains descriptive information on real estate, such as:
Identification of the real estate
Rights related to it
Encumbrances limiting the owner of the real estate
This information is listed for each cadastral area on separate title deed. Such title deed lists all the information on all the real estate owned by the same person in relevant cadastral area.
Furthermore, the Cadastre of Real Estate includes the Collection of Deeds which contains documents relevant for the registrations in the register (such as past acquisition titles to real estate or geometric plans).
The descriptive information as well as excerpts from the individual title deed can be obtained for a fee electronically via the website of the State Administration of Land Surveying and Cadastre (http://katastr.cuzk.cz).
Selected information can also be obtained on a non-reliance basis for free.
The Civil Code states that if a person acquires a real estate from the person registered in the Cadastre of Real Estate for a consideration and in good faith, then the ownership of the real estate is acquired even if the registered person has not been the legal owner of the real estate.
If the relevant Cadastral Office makes an error during a registration in the Cadastre of Real Estate, only a compensation for related damages can be claimed.
Real estate is typically acquired via:
Direct purchase (asset deal)
Acquisition of shares in the company holding the real estate (share deal)
In the past, acquisition of shares was often preferred due to tax reasons, as direct transfers of real estate were subject to the real estate transfer tax of 4%. However, in September 2020 the real estate transfer tax was dropped and currently the asset deal transfer is no longer subject to specific taxation. Still there are a few advantages when it comes to share deal – mainly provision of functioning company with capital to the buyer. This can be a bonus where the buyer/investor is a developer and would need these tools either way.
The disadvantage of share deals is that the investor acquires not only the relevant assets, but all the company’s liabilities as well. This is sometimes mitigated by corporate demerger, where the relevant asset is demerged to a newly established clean company that is subsequently the subject of the share deal.
With an asset deal the registration in the cadastral register is performed based on an application signed by each party to the purchase agreement, accompanied by an original or certified copy of the purchase agreement. The registration is subject to a fee, currently CZK 2,000. The registration proceedings take about one month, provided that the ownership is then transferred retroactively from the date of the filing of the application.
Because of an over 40-year period of communism in the Czech Republic, a kind of settlement of injustices made during these times has been implemented into the Czech law. The so-called restitution of Real Estate property in the Czech Republic is bound to the property unlawfully escheated by the Communist regime in the 1945-1989 period. Restitutions are mainly governed by the so-called restitution acts.
Due to the various restitutions, it is advisable for investors to check thoroughly the legal status of the intended acquisition from the point of being potentially the object of restitution at the Czech State Land Office, even though the risks relating to the restitutions are smaller every passing year.
In the past, real estate transfer tax was payable on the transfer of real estate in an asset deal. The rate of tax was 4 % from the agreed purchase price. This transfer tax is no longer in force since September 2020 and therefore, the transfer is not subject to special taxation.
However, in cases where no exemption (of which there are many, mainly the 2-10 year time test – depending on the time of purchase and personal/investment usage) can be used, the income tax still applies. The rates can be found in the Share Deals section of this material.
The cancelled real estate transfer tax never applied to share deals. Instead, the income of the seller from the sale of the shares may be subject to:
As with asset deals, there are several exemptions to income tax, which are targeted mostly towards natural persons. An advantage is that share deal is not subject to VAT.
The following real estates are exempt from VAT:
The Czech Republic has recently implemented significant legislative changes to streamline and expedite construction permitting processes. The new Building Act (Act No. 283/2021 Coll.), effective from January 1, 2024, introduces several reforms aimed at simplifying the preparation and realization of constructions.
The previous two-phase process, involving separate land-use and building permits, has been consolidated into a single project permit. This change is designed to reduce administrative burdens and accelerate project approvals.
The Act classifies constructions into four categories: small, simple, reserved, and others. This classification determines the level of documentation required, the necessity of official permits, and whether professional builders must be engaged.
A comprehensive digital platform, the Builder’s Portal, has been introduced to facilitate electronic submissions, communication with authorities, and access to planning documentation.
However, due to initial challenges faced by authorities in adapting to the digital system, it is currently still possible to submit applications in paper form, as was previously the standard. This transitional allowance aims to ensure smooth processing and avoid delays during the digitalization rollout.
A new specialized authority has been created to oversee permits for designated constructions, such as highways, railways, and energy infrastructure projects. This centralization is intended to ensure expertise and consistency in handling complex projects.
The Act introduces a single environmental assessment document that consolidates multiple evaluations required under previous regulations. This unification simplifies the environmental approval process for new constructions.
For simple constructions, such as single-family homes, the permitting process has been expedited, with decisions expected within 30 days. This measure addresses previous delays and supports timely project initiation.
These legislative reforms are expected to enhance the efficiency and predictability of construction permitting in the Czech Republic. The consolidation of procedures, digitalization, and clear categorization of building types aim to reduce administrative hurdles and foster a more investor-friendly environment. Developers should familiarize themselves with the new requirements and utilize the digital tools provided while remaining aware of the continued option for paper submissions during this transitional period.
Handling real estate transactions in the Czech Republic requires not only legal precision but also deep knowledge of local procedures and regulations. Our Czech experts offer end-to-end support, from legal due diligence and contract drafting to tax advisory and compliance, ensuring your property deals are secure, efficient, and fully compliant. Whether you’re buying, selling, or investing, we help you navigate every step with confidence.
As in previous years, our tax experts have prepared a comprehensive tax guideline for the Czech Republic. This eBook provides useful information that shall matter to you when considering doing business in the Czech Republic
The real estate investor can acquire real estate located on the territory of the Czech Republic by way of an asset deal (e.g. direct acquisition of real estate) or a share deal (e.g. acquisition of a corporation owning real estate).
Foreign entities (natural or legal) may directly acquire real estate in the Czech Republic.
As an option, the investment can be done through a resident corporation which directly owns the real estate.
| The form of business | The minimum capital (approx. in EUR) | Corporate Income Tax treatment | Tax rates |
|
| English | Czech | |||
| Unlimited Partnership | Veřejná obchodní společnost (v.o.s.) | N/A | Income tax base is calculated at the level of the partnership and then transferred to partners; tax is levied at the level of the partners. No need to file a tax return. | 15%1) or 21% 2) |
| Limited Partnership | Komanditní společnost (k.s.) | N/A | Income tax base attributable to general partners is transferred to general partners and tax is assessed at the level of general partners. The remaining part of the income tax base is taxed at the level of the entity. | 15%1) or 21% 2) 21% 3) |
| Limited Liability Company | Společnost s ručením omezeným (s.r.o.) | N/A | Non-transparent, fully liable to tax. | 21% |
| Joint Stock Company | Akciová společnost (a.s.) | CZK 2,000,000 (approx. EUR 80,0004)) | Non-transparent, fully liable to tax. | 21% |
| Branch | Organizační složka | N/A | Income tax base attributable to the Czech branch is taxable. | 21% |
| Cooperative | Družstvo | N/A | Non-transparent, fully liable to tax. | 21% |
| Sole entrepreneur | Živnost | N/A | Taxed as part of the overall liability of the individual. | 15% |
1) In the case that the general partners are individuals, personal income tax rate of 15% applies.
2) In the case that the general partners are corporations, the corporate income tax rate of 21% applies.
3) Tax base attributable to limited partners is taxed at the level of the partnership at 21% corporate income tax rate.
4) Exchange rate used – 25.000 CZK/EUR, rounded to the nearest 10.
| Contribution for | Maximum ass. base per year | Employee | Employer | Sole entrepreneur |
| Social security | ||||
| – Pension insurance | CZK 2,234,736 (approx. EUR 89,390) | 6.5% | 21.5% | 28% |
| – Sickness insurance | 0.6% | 2.1% | 2.7%1) | |
| – Unemployment insurance | N/A | 1.2% | 1.2% | |
| Health insurance | N/A | 4.5% | 9% | 13.5% |
| TOTAL | 11,6% | 33,8% | 45.4% |
1) The contribution is voluntary.
Social security and health insurance assessment base of an employee is derived from taxable employment income. In case of sole entrepreneur, the assessment base is calculated as the half of the personal income tax base.
The maximum base for social security contributions amounts to to CZK 2,334,736 (approx. EUR 89,390) per year/per employer.
If the assessment base exceeds the limit, the amount of income that is above the limit is not subject to social security. When an employee has more than one employer during the year, the limit for social security contributions (24,8%) is applicable for each employer separately.
Residents of the EU are covered by the provisions of EC Regulation 883/2004 regulating social security and health insurance rules in case of cross-border activities. If non-EU residents work in the Czech Republic or Czech nationals work in a third country a bilateral social security agreement may provide for the applicable social security legislation (where such agreement is concluded). Provided that a bilateral social security agreement is not concluded, the local legislative applies only.
| Main features of employment relationship | Applicable law on labour | |
| Contract type |
Labour contract (either for definite or indefinite period) |
|
| Contract must include |
Type of work |
|
| Working time | 40 hours per week | |
| Holiday entitlement per year | 20 days | |
| Other comments | Trial period (max. 3 or 6 months), statutory rules in case of employment termination, notice period (minimum of 2 months) | |
Employment contract preparation available just a click away in our eShop
Corporate income tax is levied at a general rate of 21%.
Corporate income tax rate of 5% applies to basic investment funds. Pension funds are subject to tax rate of 0%.
A company is treated as a Czech tax resident if it has its legal seat or place of effective management in the Czech Republic.
Tax resident companies are taxable on their worldwide income. The taxable income is calculated based on the accounting profits according to Czech accounting regulations and is adjusted for tax purposes. Tax non-resident companies are taxed only from Czech source income.
The calendar year or the fiscal year.
The taxpayer has the obligation to calculate the tax due in the corporate income tax return (self-assessment). The time-limit for filing the tax return is generally three months after the end of the tax period. If the CIT return is filed electronically, the time-limit for filing the tax return is four months. If the CIT return is filed by a tax advisor or the taxpayer is subject to a statutory audit, the time-limit for the submission of the CIT return is six months.
With effect from 1 January 2024, it is also possible to keep accounts in EUR, GBP and USD if this is so-called “functional currency” of the company. The “functional currency” is defined as the currency of the primary economic environment in which the company operates. The company shall be able to justify the procedures and analyses used to determine that functional currency.
However, the corporate income tax liability determined in tax return shall be determined in CZK. If the tax liability is paid from a foreign currency account and there is an overpayment or underpayment only due to exchange rate differences, this overpayment or underpayment will not be taken into account, and the tax liability will be considered by Czech tax authorities as fully paid.
In the future, it is planned to allow companies to keep their accounts in other foreign currencies (not only EUR, GBP and USD), and also to allow the determination of the corporate tax liability in this currency.
Advance payments must be paid semi-annually, if the last known tax liability is between CZK 30,000 – 150,000 (approx. EUR 1,200 – 6,000). Then the advance payment amounts to 40% of the tax liability.
If the last known tax liability is higher than CZK 150,000 (approx. EUR 6,000), the advance payment is ¼ of the previous tax liability and is paid quarterly.
Generally, expenses incurred in obtaining, ensuring and maintaining taxable income are fully tax deductible, unless they are listed as non-deductible items or items which are deductible only up to a limit set by the law.
Expenses on research and development projects can be deducted from tax base up to 100%, resp. 110% of the expense. In fact, research and development costs are claimed twice, because the cost of research and development project remains in the calculation of the tax base. Deduction can be made for up to 3 years.
Companies can obtain tax deductions in two forms. A deduction for assets acquired for professional education, can be made twice:
1 |
by the depreciation of asset which decreases the tax base |
2 |
by the deduction of up to 110% of value of asset in the year of acquisition |
Companies providing professional education can deduct CZK 200 (approx. EUR 8) per hour of educational activity, which is the second form of deduction.
Tax losses derived after 1993 may be carried forward for 5 tax years.
Starting from July 2020, the tax losses can be carried backwards for 2 tax years. The maximum amount that can be claimed is CZK 30 million (approx. EUR 1,200,000).
The following types of income are tax exempt:
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%.
There are several conditions which must be met to be able to claim the exemptions in the situations 1-3 above. The key condition is that the parent company holds at least a 10% share in the subsidiary for at least 12 uninterrupted months. Income under situation 1 above is tax exempt also if paid to a resident of Switzerland, Norway, Iceland and Liechtenstein.
Investment incentives are available to Czech Republic seated entities owned by both Czech and foreign investors for the following supported areas:
Manufacturing industry
Technology centers
Business support services centres – shared-services centres, software-development centres and high-technology repair centres, call centres and data centres
While meeting the conditions, investments incentives can be provided in the following forms:
Dividends paid to residents and non-residents are subject to 15% withholding tax.
However, under the EU parent-subsidiary directive, dividends paid from subsidiary to parent company are exempted from taxation under the following conditions. Dividends paid from a subsidiary (CZ, EU) to its parent company (CZ, EU) are exempted from taxation, if the parent holds at least a 10% share in the subsidiary for at least 12 uninterrupted months. Similar treatment applies also to dividends paid by a CZ subsidiary to a parent company seated in Norway, Iceland, Switzerland and Liechtenstein.
Withholding tax of 35% applies when dividends are paid to other jurisdictions than EU/ EEA states or states with which the Czech Republic did not conclude a double tax treaty.
Interest paid to non-residents is subject to a 15% withholding tax. Exemption can be applied when interest is paid by a Czech resident to a company with permanent residency in the EU, Switzerland, Norway, Iceland or Liechtenstein. Taxpayers from EU/EEA are permitted to file a tax return to deduct costs related to interest payment.
A 35% rate applies when interest is paid to other jurisdiction than EU/ EEA states or states with which the Czech Republic did not conclude double tax treaty.
Royalties paid to non-residents are subject to 15% withholding tax. Royalties can be exempted from taxation when paid from Czech tax resident to company from EU member state, Switzerland, Norway, Iceland or Liechtenstein. Taxpayers from EU/EEA are permitted to file a tax return to deduct costs related to royalties.
A 35% rate applies when royalties are paid to other jurisdiction than EU/ EEA states or state with which the Czech Republic did not conclude double tax treaty.
It is prohibited to deduct interest expenses from loans provided by related parties when the sum of loans during a tax period exceeds six times the equity if the recipient of a loan is a bank or insurance company or exceeds four times the equity for other recipients of loans.
Excessive borrowing costs are tax deductible only up to a predefined limit. The limit is set at 30% of tax profit before taxes, interest, depreciation, respectively CZK 80 million (approx. EUR 3,200,000).
At the same time, the Income Tax Act allows the tax base or the difference between income and expenses to be reduced in the following tax periods by amounts that have under the proposed rule increased the tax base or the difference between income and expenses in previous periods. The mentioned reduction of the tax base or the difference between income and expenses is allowed in a tax period in which the taxpayer does not reach the limit of excessive borrowing costs.
In determining its tax base, the controlling company considers the so-called included revenues achieved by the controlled foreign company. Included revenues cover e.g. license fees, dividend income, income from sale of ownership share, income from sale of goods and provision of services from/to affiliates without added value/ with little added value, insurance, banking and other financial services, etc.
The so-called included revenues form part of the tax base of the controlling company in proportion to the share capital of the controlled foreign company. The adjustment of the tax base of the controlling company by the included revenues shall not be done provided that such an adjustment would lead to decrease of the tax base of the controlling company.
The Czech Republic implemented DAC VI EU guideline under which cross-border arrangements the implementation of which can lead to a tax advantage must be reported to tax authorities. The first reporting deadline was set at 31 January 2021.
The Czech Republic implemented DAC VII EU guideline that requires operators of digital platforms in the EU to report information about their providers.
The directive impacts platforms with the following activities:
The first reporting period is scheduled for 2023, and the first reporting deadline is set at 31 January 2024.
The transfer pricing rules apply between related parties (both resident and foreign). Parties are related if one has direct or indirect participation of 25% in capital or voting rights of the other party. Parties can also be related when the same person participates in management or control of both parties.
When prices in transaction between related parties differ from market prices and the difference is not justified, tax base is adjusted by the difference.
Elimination of double taxation (credit or exemption) is available under the relevant double tax treaty. The unused part of foreign tax may be deducted as a tax expense in the following period.
The tax rate of 15% is applied to income up to income up to CZK 1,676,052 (approx. EUR 67,040), which monthly equals an employment income up to CZK 139,671 (approx. EUR 5,590), and the tax rate of 23% is applied to income exceeding this amount for 2025.
Certain types of income are not aggregated but are subject to a special final withholding tax of 15% or 35%.
Individuals who have their permanent residence or habitual abode in the Czech Republic are treated as Czech tax residents. An individual has his/her habitual abode in the Czech Republic if he/she is present in the Czech Republic for at least 183 days (in aggregate) in a calendar year (except individuals who stay there for the purposes of studying or receiving medical treatment). All other individuals are treated as Czech tax non-residents. Should an individual be also regarded as a tax resident in another country based on the other country’s domestic law, the double tax treaty determines his/her final tax residency status based on tie breakers stipulated in the respective double tax treaty.
Individuals who are residents for tax purposes in the Czech Republic are taxed on their worldwide income. Czech tax non-residents are taxed only on Czech source income only. Taxable income of an individual is usually calculated by aggregating the separate net results of the following income categories:
Employment income: salaries, wages, bonuses, remuneration of executives and board members
Capital income: interests and dividends (also from foreign sources for Czech tax residents)
Other income: income from the sale of securities, sale of property (if not tax exempt)
Income from the independent activity: income from business activities and professional services
Rental income: income from lease of immovable property
Related expenses can be applied only for the income from the independent activity, rental and other income. Specific exemptions and deductions differ for each income category, for the income from the independent activity and rental income, expenses can be applied as a percentage of income or as actual expenses.
There are several exemptions from taxation stipulated in the Income Tax Act e.g.:
Calendar year.
Tax return must be filed by 1 April of the following year (paper form) or by 1 May electronically via a data mailbox or with an electronic signature. The deadline can be extended until 1 July if the tax return is prepared and filed by a tax advisor or by an attorney based on a power of attorney. An employee, who does not have to file the tax return, may take part in the process of annual tax reconciliation arranged by the employer, the request has to be signed by 15 February.
Tax losses generated from independent activities and rental activities may be set off against all types of income (except of employment income). Losses that cannot be set off may be carried forward or carried back. The standard carry-forward period is 5 years. A taxpayer may also claim the tax loss in 2 preceding tax periods up to the maximum total amount of CZK 30 million via a supplementary tax return.
The following deductions can be applied by an individual:
In 2025, the annual basic personal tax relief can be claimed in the amount of CZK 30,840 (approx. . EUR 1,230).
Allowance of up to 24,840 CZK (approx. EUR 990 can be claimed by a resident taxpayer whose spouse does not have annual taxable income higher than CZK 68,000 (approx. EUR 2,720) and only if they take care of a child in age up to 3 years. The basic dependent-spouse relief doubles in case of disability of the spouse.
Taxpayers with disability may apply a relief from CZK 2,520 (approx. EUR 100) to CZK 16,140 (approx. EUR 650), depending on the extent of the disability.
Resident taxpayers are entitled to a tax allowance for each child living in the same household with him. The amount depends on the number of children. Annual tax allowance is CZK 15,204 (approx. EUR 610) for the first child, CZK 22,320 (approx. EUR 900) for the second child and CZK 27,840 (approx. EUR 1,110) for any other child.
All the reliefs and allowances mentioned above are annual and can be applied for any resident of EU/EEC, if the income from the Czech Republic is at least 90% of overall taxpayer’s income.
| The summary of 2025 tax benefits for individuals | |||
| Tax reliefs | Amount/year | Conditions | Documents required |
| Taxpayer relief | CZK 30,840 | No conditions – applicable for everyone | No documents needed |
| Spouse relief | CZK 24,840 | Spouse / registered partner living with the taxpayer in common household |
Confirmation from the spouse’s employer or filled in and signed document Spouse Affidavit if the spouse is not employed Birth certificate of the child incl. translation if the birth certificate is not in Czech
Marriage certificate / certificate of registered partnership incl. translation if the marriage certificate is not in Czech |
| The income of the spouse not exceeding CZK 68,000 (excluding social security benefits, e.g. parental allowance with the exception of financial help in maternity) and only if he/she takes care of a child in age up to 3 years. | |||
| Disability relief | CZK 2,520 | The taxpayer receives disability pension for the first or second degree of disability | General statement about receiving a disability pension* and annual confirmation about payments received |
| CZK 5,040 | The taxpayer receives disability pension for the third degree of disability | ||
| Relief for the holders of Card of person with disabilities (ZTP/P) | CZK 16,140 | Card of person with disabilities (ZTP/P) | Card of person with disabilities (ZTP/P)* which indicates the validity period |
| Allowance on 1st dependent child | CZK 15,204 | The child is living with the taxpayer in common household. It covers the taxpayer’s child, a child at alternative care of taxpayer, an adopted child a child of a spouse living with the taxpayer in common household, the grandson/granddaughter living with the taxpayer in common household. If the child is a holder of ZTP, the tax allowances is doubled | Birth certificate of the child* and confirmation from the employer of the other parent that he/she does not apply tax allowance on the child. If the spouse is not employed the document Spouse and child affidavit needs to be filled in and signed. If a child is older than 18 years and is studying confirmation of study for the whole year is needed (student at university up to age of 26, PhD student up to 28 years). If the child studies at a foreign university abroad, the decision of the Czech Ministry of Education on the recognition of the higher education is also needed. If a child is holder of ZTP/P card, the copy of this card is needed |
| Allowance on 2nd dependent child | CZK 22,320 | ||
| Allowance on 3rd and next dependent child | CZK 27,840 | ||
| Donation for charitable purposes including blood donation | Max 30% of tax basement CZK 3,000/blood donation |
At least 2% of tax basement, minimum amount is CZK 1,000 (in total) | Confirmation of the gift donated (gift contract, confirmation of a recipient of a gift), confirmation about blood donation |
| Mortgage interests | Max CZK 300,000 / Max CZK 150,000 per a household (for loans concluded from 1 January 2021) | Interest on building savings / mortgage loans or related contracts | Copy of Mortgage contract*, Confirmation of mortgage interests paid in the period, copy of Statement from real estate cadastre* |
| Direct contractor | |||
| Ownership of an apartment, land, building, membership share in a cooperative | |||
| Use for permanent housing | |||
| Life Insurance Contributions ** |
Max CZK 48,000 in total for all retirement savings product and long-term care insurance
|
Payment of insurance benefits after 60/120 months (5/10 years) and simultaneously not earlier than on 60 years of age (unless the insured amount is agreed) | Copy of Life Insurance contract*and Confirmation of life insurance paid in the period |
| Pension Insurance Contributions** | Max CZK 24,000
|
From 1 January 2024: Payment of insurance benefits after 120 months and at the earliest in the year of reaching the age of 60 years Until 30 June 2024: The tax base deduction is applicable from the amount exceeding CZK 12,000 of the contributions paid (up this amount a state subsidy is applicable) From 1 July 2024: Only contributions above CZK 1,700 are considered for the deduction |
Copy of Pension Insurance contract* and Confirmation of pension insurance paid in the period |
| Long Term Investment Product (DIP) | Payment of insurance benefits after 120 months and simultaneously not earlier than on 60 years of age | Copy of the DIP contract and the Confirmation of contributions paid in the period | |
| Long Term Care Insurance |
Dependency of the insured corresponding to dependency level III or IV according to the legislation regulating social services. Not applicable if the insurer may terminate the contract later than 2 months from the date of its conclusion or may terminate it on the basis of notification of the occurrence of an insurance event, or has the right to change the amount of the insurance premium depending on the age or health status. |
Copy of the Long-term care insurance contract and the Confirmation of contributions paid in the period | |
*If the contributions were already deducted in the past and the related documents were provided to the Czech tax authorities, we do not require these documents.
**Please note that in case of pension insurance/life insurance contributions paid to insurance company seated outside the Czech Republic, all related documents need to be translated into Czech (if not issued in Czech). As tax deduction can be applied contributions paid to an organization within EU.
Standard rate: 21%.
Reduced rate 12% applies to specific goods, such as food and drinking tap water, special healthcare products or pharmaceutical products (incl. drugs and vaccines), public transportation, hotel accommodation, catering or entry to cultural and sport events.
The VAT rules are based on the principles of the Council Directive 2006/112/EC on the Common System of Value Added Tax. The Directive is implemented in the Czech law by Act No. 235/2004 Coll., on Value Added tax.
Legal entities and individuals that carry on an economic activity.
Total consideration charged for the supply, excluding VAT but including any excise duties or other taxes and fees.
Calendar month or quarter, based on turnover for one calendar year. Compulsory tax period for newly registered VAT payers is calendar month.
Periodical VAT returns: monthly or quarterly, by the 25th day of the following month.
The amount of VAT liability consists of the VAT due on supply of goods and services carried out by the entrepreneur less input VAT of the same period.
In addition, taxable person carrying out intra-Community supplies or providing services according to the basic rule for “business to business” services has to file an EC Sales List (that shows the VAT identification numbers of his business partners and the total value of all the supplies of goods and services performed by the entrepreneur) on a monthly or quarterly basis depending on the situation.
From 2016, VAT registered persons are also obliged to file a recapitulative statement that contains details of transactions subject to VAT in the Czech Republic as well as of transactions where input VAT deduction is claimed.
Reverse charge applies to the intra-community acquisition of both goods and services. Local reverse charge is applicable in certain cases between two Czech VAT payers.
A permanent reverse charge regime applies, regardless the taxable amount, to supply of gold, supply of intangible property when VAT is included in the price voluntary, supply of construction and installation services and provision of workers who provide construction and installation services and, also to supply of selected goods – mainly scrap.
A temporary reverse charge regime applies, if the total amount of the tax base for the taxable supply exceeds CZK 100,000 to the following commodities:
The threshold for mandatory VAT registration for taxable person with registered office, place of business or fixed establishment in the Czech Republic is the turnover of CZK 2,000,000 (approx. EUR 80,000) for a calendar year. Voluntary VAT registration is possible as well.
A foreign taxable person that makes long-distance sales (mail order business) in the Czech Republic to any person that is not registered for VAT in the Czech Republic has to register for VAT in the Czech Republic if the total value of the relevant transactions (distanced sale of goods and provision of telecommunication services, radio and television broadcasting services and electronically provided services to a non-taxable person), did not exceed EUR 10,000 (approx. CZK 250,000) in the relevant and the immediately preceding calendar year. Alternatively, a single EU VAT return submitted in the OSS (One-Stop-Shop) scheme will be an option.
Taxable person must register as an identified person in the following situations:
Several taxable persons who have their seat, place of business or fixed establishment within the territory of the Czech Republic and are connected financially, economically, and organizationally, may be deemed as a single taxable person.
There is no net worth tax in the Czech Republic.
This tax consists of land tax and building and apartment tax. Amount of the real estate tax depends on the purpose of the land, building or apartment and location. The basic rates can be increased by decision of municipality.
Starting from 2023 windfall tax applies to excess profits of large banks and companies in the energy industry. The tax will only apply for a limited period in the years 2023, 2024 and 2025.
The tax base is calculated based on the CIT base of the entity generated in 2023, 2024 and 2025 that exceeds the average of tax bases that the entity generated during the period 2018, 2019, 2020 and- 2021 increased by 20%. Those selected entities are therefore subject not only the standard 21% CIT but also to the additional 60% CIT surcharge.
Levied on road vehicle of category N2 and N3 and their trailers of category O3 or O4 if they are registered in the register of road vehicles in the Czech Republic.
Excise duties are levied on mineral oil, beer, wine, spirits, electricity, coal, natural gas and tobacco products.
Goods imported from non-EU countries are subject to import customs clearance.
Beyond our free tax guideline for the Czech Republic, we’re ready to support you with hands-on expertise tailored to your business needs. Accace offers comprehensive tax advisory and tax compliance services in the Czech Republic to help you navigate local regulations, optimize your tax strategy, and stay fully compliant. Whether you’re entering the market or already operating on the Czech market, our experts are ready to make sure your tax matters are in good hands. Get in touch with us today!
The employment of expats results in a new set of responsibilities for employers, when it comes to fiscal obligations. Our experts from Slovakia have prepared an overview on global mobility and expat tax in Slovakia, to provide a comprehensive overview on tax residency conditions, personal income tax, social security and health insurance contributions or penalties for non-compliance.
Our local tax, payroll and labour law experts are here to help you – as an expat or an employer – to obtain essential expert advice, so that you can effectively address all the matters related to cross-border mobility in Slovakia and other locations globally.
An individual is considered a Slovak tax resident if:
They have a registered permanent place of residence in Slovakia, including a temporary residence of EU citizen in Slovakia, or they have an actual residence in Slovakia
They stay for 183 days or more in Slovakia, except for purposes of study, medical treatment
Calendar year
The tax return is due by March 31 after the end of the tax period. This deadline may be extended by:
Up to 3 calendar months, with written notification
Up to 6 calendar months with income taxable abroad
Delayed filing of the tax return: from EUR 30 up to EUR 16,000
Delayed payment of the due tax: 15% p.a. from the value of overdue tax, for a period of maximum 4 years
Delayed or missing registrations at tax authorities: from EUR 60 up to EUR 20,000
Delayed or missing report on monthly salary or withholding tax from salary: from EUR 30, up to EUR 3,000
Delayed report on social security: up to EUR 16,596.96
Delayed payment of the social security contributions: 0.05% of the amount due for each calendar day
Delayed or missing registrations for the purposes of social security: up to EUR 16,596.96
Delayed report on health insurance: up to EUR 3,319
Delayed payment of the health insurance contributions: 15% p.a. from the overdue payment
Delayed or missing registrations for the purposes of health insurance: up to EUR 3,319
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
