The current tax system in Czechia was established in 1993. Taxes are divided into 3 basic groups - direct taxes, indirect taxes and other taxes. Since EU accession on 1 May 2004, the system has undergone a continuous process of harmonization with European legislation. Czechia also has a broad network of double taxation treaties with both EU and non-EU countries. These double taxation treaties are based mainly on the OECD Model Tax Convention.
Direct taxes consist of:
- Personal income and corporate income taxes governed by the Czech Income Taxes Act
- Property taxes governed by the Czech Real Estate Tax Act and Act on Road Tax
- Transfer taxes governed by the Czech Act on Real Estate Acquisition Tax.
Indirect taxes include:
- Value added tax governed by the Czech Act on VAT
- Excise tax governed by the Czech Act on Excise Taxes
- Customs duties governed by the Czech Customs Duty Act
- Ecological taxes, governed by a special Law on taxes from energy sources.
Other taxes consist of mandatory contributions into the Czech social security and public health insurance systems, governed by a variety of Czech Laws, and municipality fees, usually governed by local by-laws.
Taxpayers in Czechia are subject to the following taxes in 2023:
|Corporate Income Tax
||As from 1 January 2010, the standard corporate income tax rate is 19%.
A special tax rate of 5% is applied to basic investment funds.
Withholding taxes on income of non-residents 35/15/5 %, according the type. The withholding tax rates may be reduced by double tax treaties.
|Personal Income Tax
||15% and 23% on income exceeding social security payment cap (for 2023 approximately CZK 1.9 million).
|Value Added Tax (VAT)
||Standard VAT rate 21 percent - most products and services.
Reduced VAT rate 15 percent - basic foodstuffs, certain pharmaceutical products, certain medical equipment, heating, social housing.
Reduced VAT rate 10 percent - essential baby nutrition, certain pharmaceuticals, books and newspapers, mill products and other products suitable for a gluten-free diet.
|Real Estate Tax
||Real estate tax comprises a tax on land (land tax) and a tax on structures and units (building and unit tax).
Land tax is payable by the owner or, in special cases, by the lessee or user. The rate is CZK 2 per square meter for building plots (multiplied by indices based on the municipality where the land is located) and CZK 0.2 per square meter for the other types of land. Agricultural land is taxed based on its value. Paved areas used for business are subject to tax rate of CZK 1 per square meter (agriculture) or CZK 5 per square meter (other business activities).
Building and unit tax is calculated according to the registered built area. The tax rate ranges from CZK 2 to CZK 10 per square meter in the case of business premises and from CZK 2 to CZK 8 per square meter for residential premises and garages. The tax rate may be increased by CZK 0.75 per square meter for each additional floor exceeding 1/3 of the building built-up area.
||Energy taxes apply to natural gas and other gases, electricity and solid fuels.
Only supplies of these products delivered within the Czech Republic are subject to energy taxes.
There is a wide range of exemptions (e.g. for energy used in metallurgic or mineralogical processes). In order to claim an exemption, approval needs to be obtained from the customs authority.
||Excise tax is imposed on entities that produce or import certain goods, including hydrocarbon fuels and lubricants, alcohol and spirits, beer, wine and tobacco products.
The tax is based on the quantity of goods expressed in specific units and tax may be levied only once on a particular goods.
||Road tax is generally payable by the operator of a vehicle registered in the Czech Republic.
The tax rate varies from CZK 1,200 to CZK 4,200 in the case of passenger vehicles and from CZK 1,800 to CZK 37,800 in the case of trucks.
|Inheritance and Gift Tax
||There are no gift and inheritance taxes as of 1 January 2014. Gifts are subject to income tax except for those between close relatives.
Source: CzechInvest, 2023
- State social security system covers health care provisions, pensions, employment insurance and sickness pay as well as child-related benefits and other social services.
- Both employers and employees contribute to the social security system.
- Employers are obliged to pay salary to employees for the first 14 days of illness. Statutory sick pay is paid from the 15th day
|Type of insurance
|Health care insurance
|Pension insurance fund
|Employment insurance fund
|Sickness insurance fund
Source: Labour Act, 2023