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Corporate Tax in Czech Republic
Updated on Thursday 02nd May 2019 Rate this article
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The corporate tax in Czech Republic is one of the taxes that are applicable to businesses registered in this country. Businessmen who want to open a company in Czech Republic should know that the corporate tax is the main tax to which businesses are liable to, which is currently imposed at the standard rate of 19%. However, depending on the specific business activities of the Czech company, other tax rates can be available. Our team of specialists in company formation in Czech Republic can provide an in-depth presentation on the corporate tax system available in this country and may also assist legal entities in registering for taxation purposes.
When is the Czech corporate tax applicable?
The corporate tax in Czech Republic is a type of tax imposed on the profits of a company. Thus, most of the business activities developed in this country are imposed with the corporate tax and the manner in which the tax is applied depends on the tax residency of the company. Our team of consultants in company registration in Czech Republic can provide an extensive presentation on the below mentioned situations, which require the payment of the corporate tax:
- • the corporate income tax is applied to the profits of a company, corporate body or partnership (general or limited partnership);
- • the corporate tax in Czech Republic is also applicable to the branch offices of foreign companies registered here;
- • in the case of a company founded in Czech Republic, the corporate tax rate is imposed on the company’s worldwide revenues;
- • in the case of non-resident businesses, the Czech Republic corporate tax rate is applied only to the profits obtained on the country’s territory;
- • the standard corporate tax rate (of 19%) is imposed on the company’s profits, as well as to its capital gains.
What are the Czech Republic corporate tax rates?
As we presented above, the standard Czech Republic corporate tax rate is of 19%. However, those opening a company in Czech Republic may benefit from lower rates, in specific conditions. For example, the tax legislation available here stipulates a lower corporate tax rate, of 15%, applicable to the dividend income of Czech tax residents obtained from non-resident companies.
Furthermore, a lower Czech Republic corporate tax rate is applicable on the income obtained by investment funds, which benefit from a corporate tax of only 5%. Funds operating in this country as pension funds are fully exempted from the payment of the corporate tax and our team of consultants in Czech company formation can advise on other tax benefits applicable to investment vehicles registered in this country.
What are the main obligations when paying the corporate tax?
Companies liable to the payment of the corporate tax have to respect a set of legal obligations throughout a financial year (which coincides with the calendar year). According to the accounting principles available here, a company needs to complete tax returns and tax assessments. Thus, the taxpayer has the obligation to calculate the corporate tax due, based on the income it has obtained and this procedure is usually completed by a specialist in the field (tax advisor, accountant).
When referring to the payment of the corporate tax, the Czech taxpayer is also required to make advance payments, and these have to be done twice a year, in the situation in which the company’s latest tax liability has a value of CZK 30,000 – CZK 150,000. If the tax liability is included into this category, the company needs to make an advance payment of 40% from the sum it is liable to.
However, in the case in which the corporate tax liability is above CZK 150,000, the advance payment is calculated at a percentage of 25% from the sum the company needs to deposit with the local tax institution. The forms that need to be filled out by Czech taxpayers can be found on the official website of the Financial Administration.
Please note that the corporate tax returns in the Czech Republic have to be completed following the forms that are available in the Czech language, as stipulated by the Act No. 280/2009., Coll. (the Tax Code). There are different forms, depending on the nature of the company (corporate body, investment fund, etc).
Investors are invited to contact our team of specialists in company registration in Czech Republic for in-depth advice on any other inquiry referring to the Czech corporate tax. Our consultants can provide full assistance on the tax and accounting principles that have to be followed by local businesses and may also provide legal representation when registering with the local tax authorities.
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Call us at +420 721 565 868 to set up an appointment with our specialists in company formation in Brno. Alternatively you can incorporate your company without traveling to Czech Republic.
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