The Czech tax system is similar to those of other developed countries, especially other European countries. Roughly half of Czech taxation is in the form of direct taxes, based on individuals' income and pensions, and half in the form of indirect taxes, charged on the price of goods and services.
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% (22% for incomes over c. 1.2 million Czech crowns). 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. Every adult must submit their own individual tax return.
Corporate income tax rates are 19% and 5 %.
Submitting your tax return
Generally, any individual whose taxable income in the Czech Republic exceeds CZK 15,000 during a calendar year must file a Czech personal income tax return. If you are an employee this tax return is usually completed and submitted by your employer.
You may be eligible to claim tax reductions for mortgage interest and life insurance premiums you have paid during the given year, donations you have made to charity, and for a dependent spouse and any dependent children in your family.
The deadline for income tax returns (for the previous calendar year ending 31 December) is March 31, however if your tax return is prepared by a registered Czech tax adviser the deadline is June 30.
If you have tax residence in the Czech Republic (see section below on tax residency), you must pay tax on all your income earned in the Czech Republic and/or abroad.
EURAXESS can give general advice on the Czech tax system, but if you require specific help with determining your tax obligations, keeping accounts or completing a tax return, please contact a qualified accountant. You will find contacts for several English-speaking accountants in this directory.
English templates to help you complete Czech tax forms can be found here.
Real estate tax applies to land and buildings and is dependent on their size, value, location and use. The tax must be paid on all land or buildings you own, every year. However you only need to complete the tax return once - by 31 January following the end of the first year when you bought or obtained the property. After that you will be automatically charged each year for the relevant amount of tax. If something changes, you acquire further property or you no longer own the property, you must submit this information to the tax office.
Property tax returns must be submitted to the finance office in the place where the property is located (N.B. this may not be the same as where you live).
Road tax only applies to motor vehicles and their trailers if used for business purposes (including self-employment). Vehicles used exclusively for personal use are not liable to tax.
However, all vehicles must pay a charge if they wish to use Czech motorways - this is done by buying a "vignette" which is valid for one calendar year. For more information about the motorway vignette please see here.
Real estate tax applies to land and buildings and is dependent on their size, value, location and use. The tax must be paid on all land or buildings you own, every year. However you only need to complete the tax return once - by 31 January following the end of the first year when you bought or obtained the property. After that you will be automatically charged each year for the relevant amount of tax. If something changes, you acquire further property or you no longer own the property, you must submit this information to the tax office.
Property tax returns must be submitted to the finance office in the place where the property is located (N.B. this may not be the same as where you live).
Value Added Tax is charged on many goods and services at either the basic rate of21 % or the reduced rate of 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 heating. Financial services are exempt from VAT.
If you provide goods or services as part of your own business or self-employment, you may be required to register for VAT purposes, to charge VAT to your clients and/or to submit VAT returns. Please check at your local finance office for further information.
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, local taxes and charges for waste collection/disposal (usually paid as part of your rent or monthly charges), dog ownership, tourist tax, and charges for air or water pollution. If you are unsure about any of these charges please check with your local authority.
If you are a foreign resident and you are working in the Czech Republic, your tax obligation is related to your tax residence, which is not necessarily the same as your visa/residence status, and will depend on how much of the year you spend in the Czech Republic and which country you are from. For tax purposes, you may be considered resident, nonresident, or resident for part of the year.
You will usually be considered to have tax residence in the Czech Republic if:
• You have permanent residence in the Czech Republic
• Your usual place of residence (where you live) is in the Czech Republic. This is if you spend at least 183 days (in total) in the Czech Republic within one calendar year.
If you are tax resident in the Czech Republic you must declare and pay tax in the Czech Republic on all your worldwide income (from employment, self-employment, rental, investment, capital gains, and other sources). It is possible that you will also have some tax requirements in your country of origin - please see the relevant double taxation treaties (below) or consult a tax advisor to be sure.
If you are not tax resident in the Czech Republic, you will pay tax in the country where you are tax resident, but may also be required to pay Czech tax on income from Czech sources.
The following link will take you to a list of countries that have some sort of agreement in place with the Czech Republic to limit double taxation: http://www.financnisprava.cz/en/internation-tax-affairs/double-taxation.
Tax residency can be a complex issue and it is advisable to consult a tax advisor or accountant with a specialism in international matters.
Further information on taxes in the Czech Republic can be found here.