Tax system
The Czech Taxation System consists of direct
and indirect taxes – both types providing very
similar tax revenue.
Direct taxes
Personal income tax is paid by employees
and small businesses or so called self-employers.
The personal income tax rate is a flat rate of 15%.
Employers are obliged to deduct tax advances under
a payroll deduction scheme, self-employers pay tax
advances by themselves and file an income tax return
every year to settle any differences between the
amount due and amount advanced. Also, it is possible
to claim a tax exemption for a dependent child or disabled
spouse etc. Joint tax return is not possible in the Czech Republic since 2008.
To calculate your net salary use the internet portal of finance.cz (in Czech).
The rates of the corporate income tax are 19% and 5 %.
Income Tax (in Czech)
Property tax applies to land and buildings. As for land, the amount of the tax depends on the size and value of the land, its quality, location and its use. The tax for building is calculated based on its ground coverage, type and use.
Road tax is only levied on vehicles used or intended to be used for business purposes. Vehicles used exclusively for personal use are not liable to tax. All vehicles using motorways are required to pay the relevant charge imposed by law.
The rate of the inheritance tax and gift tax range from 0.5 to 40 % depending on the relation between the deceased/donor and the beneficiary (heir or donee). Any properties inherited by children from their parents are not subject to taxation.
Indirect taxes
The basic rate of the Value Added Tax amounts 20 % and the reduced rate to 10 %. The majority of goods and services are subject to the basic rate. The reduced rate applies to foods, medicines, printed matter, public transportation, undertaker services, water distribution, cultural activities, accommodation, constructions work and heat distribution. Financial services are exempt from VAT. At present a tax reform is being with a single VAT rate.
Excise duty applies to, for example, mineral oils, alcohol, beer, wine, and tobacco products. The duty is determined by fixed rates (with the exception of cigarettes, where the duty is a combination of the fixed rate and a percentage amount of the final retail price).
The rates of custom duties are specified in the Common Customs Tariff of the European Union.
Other indirect taxes include, for example, charges for air or water pollution, waste disposal etc.
