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Paying Taxes in Czech Republic

Updated on Thursday 01st September 2022

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Paying-Taxes-in-Czech-Republic
 
Companies registered in Czech Republic are required to pay several taxes at the local authorities. The taxes are due at specific periods of the year and at certain rates, as prescribed by the national legislation. Businessmen interested in setting up a company in Czech Republic should be familiar with the rates imposed here, but also with the conditions that have to be met when paying taxes in Prague.
 
Our team of Czech company formation agents can offer an in-depth presentation on the procedures referring to corporate taxation. Talk to us about Czech Republic tax rates.
 

Corporate tax in Czech Republic 

 
Businessmen setting up a Czech company should know that all the businesses established here are required to pay the corporate tax, which is a tax applicable on the profits of the company. The tax is also paid for the profits of the branches of foreign companies with operations on the Czech market
 
Companies set up as partnerships are also imposed with a corporate tax, but the taxation is performed in accordance with the profit shares of the partners. 
 
Businesses incorporated in Czech Republic operating on foreign markets are taxed on their derived income created on those foreign markets, while foreign companies with activities in Czech Republic are imposed with the corporate tax only for the profits incurred on the Czech market
 
At the moment, the standard corporate tax rate is established at 19%; our Czech company incorporation agents can offer more details about taxes in Czech Republic.
 

Paying VAT in Czech Republic  

 
All companies performing business activities in Czech Republic are imposed with the value added tax (VAT), which is imposed for the goods and services traded on the local market. 
 
The standard VAT rate is established at 21%, while the reduced VAT is applicable at the rates of 15% for specific supplies, and 10% for certain medicine, newspapers, books and supply of heat. Czech Republic also offers a VAT exemption for several services, as follows: 
 
  • postal services;
  • television and radio broadcasting;
  • insurance;
  • education;
  • social welfare. 

 

Personal income tax - Czech Republic tax rates

 
If until 2020 there is super-gross income taxed at 15%, in 2021, this tax was canceled. Also, the solidarity surcharge of 7% paid by high-income citizens was also canceled in 2021. However, the latter was replaced with progressive tax rates as follows:
 
  • • 15% personal income tax rate (PIT) for threshold above CZK 1,867,728.
  • • 23% personal income tax rate for exceeding the threshold mentioned above.
 
These taxes apply to all types of income, except for those that have already been taxed by the final withholding tax. Exceptions are also certain types of foreign income included in the separate tax base, which you can discuss with our specialists in the field. They can tell you more about taxes in Czech Republic.
 

Taxation on employment income – Taxes in Prague

 
In Czech Republic, employment income represents all income from wages, benefits, and bonuses, and these are subject to taxation. Here are some of them:
 
  • 6.5% is social security paid by the employee.
  • 4.5% is the health contribution, paid by the employee.
  • In the case of employers, they must pay social security of 24.8%, as well as a health contribution of 9%.
 
However, there are deductions or tax discounts for certain situations, such as parents with two or more children. They can benefit from tax reductions if they have a gross salary of approximately CZK 35,000. However, we invite you to discuss more Czech Republic tax rates with our local specialists.
 

Other Czech Republic tax rates

 
We will review other taxes in Czech Republic that you should take into account if you want to relocate to this country:
 
  • Property tax - is paid annually and is calculated according to the location, utility, and size of the real estate.
  • Inheritance and gift tax - Progressive taxation is applied, but there are also exemptions.
  • Net wealth tax – The Czech Republic does not impose a net wealth tax.
  • Real estate acquisition tax - Until 2020, this was 4%, but the law in this sense was abolished, with retroactive effect.
  • Local income tax – The Czech Republic does not impose such a tax.
  • Capital gains tax - does not apply to his property, with certain exceptions related to the ownership of the property for a certain period of time.
  • Withholding tax – A 15% tax is applied for income from interests or savings of resident persons in Czech Republic.
 
 
We invite you to discuss more about taxation in Czech Republic and find out what you have to pay. We remind you that penalties are imposed for not paying them, so contact us for details about taxes in Prague or any other city.
 

Average salaries in the Czech Republic

 
According to recent data for 2022, the minimum wage in Czech Republic is approximately EUR 662 (CZK 16,200). But the net minimum salary in Prague, for example, is around EUR 584 or CZK 14,300.
 
The highest salaries, however, can be found in prestigious multinational companies in Czech Republic, and more precisely in Prague, the country's capital. They can reach and exceed EUR 1,550 or CZK 38,000. According to recent information about the labor market in the Czech Republic, the unemployment rate was approximately 3.3% in July 2022, while there were over 313,000 job offers on the market.
 
Businessmen interested in receiving more details about taxation in Czech Republic imposed to corporate bodies can contact our team of Czech company formation agents for an in-depth presentation on this matter.  We can tell you more about taxes in Czech Republic.
 
 

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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.

As an CorpexLab client, you will benefit from the joint expertize of local experts and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Czech Republic.

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www.romanianlawoffice.com

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