The Czech Taxation System consists of direct
and indirect taxes – both types provide very
similar tax revenue.
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. It is possible
to claim a tax exemption for a dependent child,
dependent spouse etc. A joint tax return of married couple is not
possible in the Czech Republic since 2008.
To learn your net salary, use the income tax calculator (in Czech).
The rates of the corporate income tax are 19% and 5 %.
Real estate tax applies to land and buildings. As for land, the amount of the tax depends on 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. The basic tax rate is multiplied by a coefficient assigned to individual municipalities according to their population.
Road tax applies to road motor vehicles and their trailers used for business or other self-employment. 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 (highway vignette).
The rate of the inheritance tax and gift tax ranges from 1 to 40 %, depending on the relation between the deceased/donor and the beneficiary/heir. Any properties inherited by children from their parents are not subject to taxation.
The basic rate of the Value Added Tax amounts to 21 % and the reduced rate to 15 %. 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.
Excise duty applies to 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.
Generally, an individual whose taxable income in the Czech Republic exceeds the amount of CZK 15,000 during the calendar year is always liable to file his Czech personal income tax return. For an employee this duty is in most cases carried out by his/her employer.
It is possible to claim tax reductions for paid mortgage interests, paid life insurance, gifts and tax deductions for dependent spouse and dependent children.
The deadline for income tax return is March 31, if it is prepared by a registered Czech tax adviser the deadline can be extended to June 30.
If you are a Czech citizen or have a permanent residency in the Czech Republic, you have to pay tax on your income earned inside the Czech Republic and abroad. If you are a foreign resident and you are employed in the Czech Republic, you only have to pay tax on the income you earned in the Czech Republic