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Income Tax in Czech Republic

Income Tax in Czech Republic

The tax system in the Czech Republic corresponds with the EU legislation and it is divided in 3 groups: direct taxes, indirect taxes, plus other taxes. The corporate income tax in Czech Republic is set at 19% since 2010. Entrepreneurs who want to start a business in Czech Republic should solicit legal advice in terms of tax registration in this country from one of our Czech lawyers. Our team has experience in company registration in Czech Republic, so feel free to talk to us at any time.

What is the corporate income tax in Czech Republic?

As mentioned earlier, the standard corporate income tax in Czech Republic is set at 10% rate and it is applicable to worldwide incomes of resident companies in this country. Here are extra details about this tax:

  1. Non-resident enterprises in Czech Republic are levied only on the income generated in the country.
  2. Exceptions also apply and we refer to a 15% corporate tax rate for specific foreign companies with establishments in Czech Republic.
  3. Foreign and local companies with activities in Czech Republic benefit from the same tax treatment, but lower tax rates may apply.
  4. The provisions of the double tax treaties signed by Czech Republic also mentions the corporate income tax.

If you are a foreign entrepreneur interested in business in Czech Republic, please feel tree to solicit legal support and assistance in terms of taxation from our Czech attorneys. We can handle the tax registration and we can also help you obtain the EORI number for your company in Czech Republic.

Are capital gains levied in Czech Republic?

Yes, the corporate income tax of 19% rate (or lower rates) applies to capital gains. However, exemptions apply for capital gains on the sale of stocks and also participation in companies from EU/EEA, under certain conditions. Also, if a non-resident enterprise is registered as tax resident in a third country that signed a double tax treaty with the Czech Republic, the taxation on capital gains is exempted. Please talk to our advisors for complete information about the tax regime in Czech Republic.

Personal income tax in Czech Republic

It is important to note that the personal income tax in Czech Republic is set at a standard rate of 15% and calculated on the gross salary. Foreign investors who want to start a business in Czech Republic and hire local staff will have to observe the tax regime for employees in this country. This is another area covered by our team of Czech lawyers.

Other tax facts in Czech Republic

The VAT is another important tax to consider, besides the corporate income tax. The standard VAT  is set at 21% rate and it is applicable to most of the goods and services available for sale purposes in Czech Republic. This is followed by lower VAT rates like 15% for basic food, newspapers, specific medicines, social housing and medical equipment, plus a 10% VAT rate for specific food type, pharmaceuticals and many more. Here is extra information about other taxes in Czech Republic:

  1. 4% tax rate imposed on acquisition of real estate properties.
  2. Consumption tax imposed on fuel and lubricants, wine and tobacco, alcohol and spirits.
  3. The real estate tax imposed on occupied land and properties.

Are there any other corporate tax rates in Czech Republic?

Yes, enterprises in Czech Republic must pay a tax ranging from 15% to 35% rate on income paid to a non-resident for technical facilities. In addition, one should note other taxes too, like the road and environmental taxes, or the 4% transfer tax of the property price at the time of transactions. Please feel free to solicit us extra details about the tax structure and particularly the income tax in Czech Republic.

Investing in Czech Republic

Czech Republic offers a great business environment for both local and foreign entrepreneurs interested in making investments in this country. Among the solid points, the ease of doing business, the multitude of opportunities, the tax regime and a wide range of incentives and encouragements are the most appreciated by international entrepreneurs. Here are some facts and figures that highlight the business and economy direction of the Czech Republic:

  • the total FDI stock for 2019 was of around USD 170,7 billion;
  • Czech Republic ranks 41st out of 190 economies in the world, according to the 2020 Doing Business report issued by the World Bank;
  • more than half of the registered FDI was directed to the manufacturing sector;
  • The Netherlands, Germany, Austria and Luxembourg are the main investors in Czech Republic.

Foreign and local entrepreneurs who want to know more about the tax structure in Czech Republic are invited to contact our Czech lawyers.