Income taxes

Last reviewed 09 Mar 2023

Tax rate

15 %

23 %

Special tax rates

Certain types of income from foreign sources (e.g. dividends, interest, etc.) might be taxed in separate tax base with 15% tax rate for the separate tax base.

Tax liability

Unlimited

Natural persons who have their residence or habitual abode in the Czech Republic, are liable to tax in the Czech Republic their worldwide income (except where DTA restricts the right to assess tax).

Limited

Natural persons, who have neither their residence nor their habitual abode in the Czech Republic, are liable to tax in the Czech Republic income from sources in the Czech Republic only.

Tax assessment period

Calendar year

Income categories

Income from:

1. Employment
2. Self-employment
3. Rental and leasing
4. Capital assets
5. Other income

Accounting

Double-entry bookkeeping, is mandatory in case (i) a natural person is recorded in the Business Register or (ii) their turnover or the previous calendary year exceeds the amount of CZK 25,000,000 (EUR 1,036,699).

Loss set-offs

“Horizontal” set-off (within individual income categories): self-employment and rental income. The Tax Loss may be generated from self-employment and rental income only.

“Vertical” set-off (between individual income categories): possible, with the exception of income from employment.

Loss carryback

Loss set-off possible; Accumulated limit to loss carry back from one taxable period in the amount of CZK 30 million (EUR 1,24 million), may be deducted in full or in part during 2 preceding years.

Loss carryforward

Losses from self-employment and from rental can be carried forward and set off for 5 taxable periods.

No limit on the amounts that may be carried forward and set off is applied.

Operating expenses

Expenses for acquiring, securing or maintaining business income.

Tax allowable expenses

Expenses for acquiring, securing or maintaining business income.

Lump sum option

Motor vehicles

Depreciation over 5 years.

Maximum allowable acquisition cost: no ceiling Input VAT on cars deductible.

Social insurance

Not tax deductible for natural persons (private individuals and business people).

Withholding tax

Withholding tax is generally at 15 % for EU residents and non-EU residents from states with DTA or TIEAs; increasing to 35 % for non-EU residents from states without DTA or TIEAs.

Interest

15 % (35 %), or applicable DTA

Royalties

15 % (35 %), (5 % in the case of finance leasing), or applicable DTA

Dividends

15 % (35 %), or applicable DTA