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Taxation in Czech Republic

Taxation in Czech Republic

Updated on Friday 29th January 2016

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Taxation-in-Czech-Republic.jpgPersons interested in relocating in Czech Republic or foreign investors who are seeking to extend their business here should know the level of taxation applied by the local authorities. Czech Republic is a member state of the European Union (EU) and, as such, in terms of taxation, it complies to the EU’s tax Directives. Our Czech lawyers can provide you will assistance on the taxation and tax exemptions applicable to foreign companies here. 
 

Main taxes in Czech Republic 

 
The main taxes applied by local authorities are: 
 
corporate income tax;
personal income tax;
value added tax (VAT);
consumption tax;
 
The corporate income tax is applied at a rate of 19%, but the Czech government also has also introduced a reduced corporate tax, applicable at the rate of 5% for investment and pension funds. 
 
The personal income tax is applied at the rate of 15%, while the consumption tax is enforced for companies related to several fields of activity, such as trade of alcohol, tobacco or hydrocarbon fuels. 
At the moment, Czech Republic operates under three types of VAT, as follows: 
 
standard VAT – applied at the rate of 21% to most of services and goods sold on the Czech market;
reduced VAT – applied at the rate of 15% for basic food products, pharmaceutical products, social housing or medical equipment;
reduced VAT of 10% - it was introduced from the 1st of January 2015 and it is applicable to products related to child nutrition or pharmaceutical products and books; our lawyers in Czech Republic can offer you more details on the new VAT rate. 
 

Taxation of companies in Czech Republic 

 
A foreign business will be considered a tax resident in Czech Republic if the company will be registered or managed from the Czech territory. The dividends of a company set up as a subsidiary in Czech Republic will not be taxed if the parent company has holding rights in the subsidiary. The capital gains are usually taxed with the standard corporate rate of 19%.
 
If you need further information on the taxation in Czech Republic, please contact our team of Czech lawyers
 

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