Taxes in Europe Database v2
Act No. 586/1992 Coll., on Income Taxes,
latest amendments No. 209/1997, 210/1997, 227/1997, 111/1998, 149/1998, 168/1998, 333/1998, 63/1999, 129/1999, 144/1999, 170/1999, 225/1999,
by Constitutional Court Finding No. 3/2000, 17/2000, 27/2000, 72/2000, 100/2000, 103/2000, 121/2000, 132/2000, 241/2000, 340/2000, 492/2000, 117/2001,120/2001, 239/2001, 453/2001, 483/2001, 50/2002, 128/2002, 198/2002, 210/2002, 260/2002
by Constitutional Court Finding No. 236/2011, 308/2002, 575/2002, 162/2003, 362/2003, 438/2003, 19/2004, 47/2004, 49/2004, 257/2004, 280/2004, 359/2004, 360/2004, 436/2004, 562/2004, 628/2004, 669/2004, 676/2004, 179/2005, 217/2005, 342/2005, 357/2005, 441/2005, 530/2005, 545/2005, 552/2005, 56/2006, 57/2006, 109/2006, 112/2006, 179/2006, 189/2006, 203/2006, 223/2006, 245/2006, 264/2006, 267/2006, 29/2007, 67/2007, 159/2007, 261/2007, 296/2007, 362/2007, 126/2008, 306/2008, 482/2008, 2/2009, 87/2009, 216/2009, 221/2009, 227/2009, 281/2009, 289/2009, 303/2009, 304/2009, 326/2009, 362/2009, 199/2010, 346/2010, 348/2010
by Constitutional Court Finding No. 119/2011, 73/2011, 188/2011, 329/2011, 353/2011, 355/2011,370/2011, 375/2011, 420/2011, 428/2011, 458/2011, 466/2011, 470/2011, 192/2012, 399/2012, 401/2012, 403/2012, 428/2012, 500/2012, 503/2012, 44/2013, 80/2013, 105/2013, 160/2013, 215/2013, 241/2013, 344/2013,
by Constitutional Court Finding No. 162/2014, 247/2014, 267/2014, 332/2014 Coll.
As concerned beneficiaries of revenue from tax collection:
Municipalities and regions:
Residents are taxed on their worldwide income, non-residents on their Czech source income.
Pension income is taxed under special conditions regarding other activities of pensioner.
Since 2014/01/01 gifts tax and inheritance tax have been incorporated under the Income Tax Act Section. In general, the revenue from gifts or inheritance is equal to the price of the acquired property determined in accordance with price regulations, i.e. Act. No. 151/1997 Coll. on property appreciation, in later amendments.
Tax base shall be the amount by which a taxpayer's income in the relevant taxable period (relevant calendar year) exceeds the documented expenses (or expenses as a percentage of income) that he/she incurs in order to generate, assure and maintain such income unless relevant sections of Income Tax Act on individual types of income provide otherwise. The tax base for taxpayers with income from dependent activity is computed as an income increased by the amount corresponding to the amount of obligatory contributions of social security insurance and health insurance paid by employer. Where taxpayer has concurrently two or more of the types of income, the tax base shall consist of the sum of the partial tax bases, computed separately for each type of income. Since 2014/01/01 gifts tax and inheritance tax have been incorporated under the Income Tax Act Section. In general, the revenue from gifts or inheritance is equal to the price of the acquired property determined in accordance with price regulations, i.e. Act. No. 151/1997 Coll. on property appreciation, in later amendments.
Categories of taxable income are:
Where a taxpayer does not claim documented expenses, he may claim as expenses 80 % of income from agricultural production, forestry and water management, and of income from entrepreneurial activity under a handicraft trade licence; however, no more than 1,600,000 CZK may be deducted as expenses, 60 % of income from entrepreneurial activity under a trade licence; however, no more than 1,200,000 CZK may be deducted as expenses, 30 % of income from the lease of property included in the business property; however, no more than 600,000 CZK may be deducted as expenses, 40 % of other income from independent activity, except for some income described by the law; however, no more than 800,000 CZK may be deducted as expenses .
Where a taxpayer does not claim documented expenses, he may claim as expenses 30 % of his income from the leas of property (real estate, and movables), which is not a part of a business property up to the amount of 600,000 CZK.
The Income Tax Act defines deductions by special rules for corporations and individuals.
The tax base for a period of taxation may be reduced by payments for examinations verifying the results of further education under the Act on the Recognition of Results of Further Education.
Donations for purposes of science, education, culture, medicine, ecology, sports, and religion are deductible up to 15 % of the tax base. Their total value must exceed either 2% of the tax base or amounts at least CZK 1,000 and recipient (donee) must be established or domiciled in a Member State of the European Union, Norway or Iceland. An amount equal to the interest paid in the taxable period on a loan provided from a housing savings scheme or from a mortgage loan, provided that the taxpayer to finance his housing needs uses any such loan, shall be deducted from the tax base. The total sum of interest payments by which the tax base may be reduced with regard to loans granted to taxpayers living in one household may not exceed CZK 300,000. Contributions to private insurance system and private pension system are deductible from the tax base up to 12,000 CZK per year.
Tax losses may be carried forward for 5 years.
Personal Income Tax Relieves (the amount deductible from tax):
Where a taxpayer has parallel income from more types of activities (employment, capital income or other income), the eligibility of tax credits is maintained, if the sum of the tax-base where using the lump-sum expenses will be less than 50% of the total tax base.
Tax Relieves (the amount deductible from tax):
There are two categories of tax relieves available to the taxpayers depending on number of their disabled employees.
The payments of pensions from the obligatory system are not being taxed up to certain limit (a pension that does not exceed 36 times of minimum wage in a taxable period is tax free).
Occasional income from renting movable property is exempted up to the limit of 30,000 CZK/year.
Income from occasional activities is exempted up to the limit of 30,000 CZK/year.
Revenues from donations and gifts have been taxed from 2014/01/01, Revenues from donations and gifts are tax exempted among direct relatives (in the direct line) and among other relatives (in the collateral line), namely siblings, uncles, aunts, nephews, nieces, sposes, children´s spose (sons-in-law and daughters-in-law), sposes´s children, spose´s parents and sposes´s parents and individuals living with the donor in a common household for at least a year prior to the transfer and who for that reason took care of the common household or who were dependent on the donor for his/her maintenance (support). The gifts received in connection with performing an activity of employment or self-employment activity are still not tax exempted.
Revenues from heritage/inheritance have been tax exempted without any other exception since 2014/01/01.
Income from sale of immovable property is tax exempted if this property is used for permanent housing at least 2 years before selling or is owned for more than 5 years, income from transfer of shares and securities beyond of certain period of holding or up to the certain limit, etc.
Since 2013 “special solidary surcharge” is introduced. The base of this surcharge is computed as a positive difference between 1. the sum income included in the partial tax base from employment and in the partial tax base from independent activity and 2. average salary according to the Social SecurityAct multiplied by 48. The rate of this special surcharge is 7 % from the base described above.
The dividends and shares in profit are taxed through a withholding tax at 15 %. The interests from savings accounts are taxed through a withholding tax at 15 %. Withholding tax 35 % for payers that are not tax residents of another EU Member State or another State that forms the European Economic Area, or of a third State or jurisdiction with which the Czech Republic has made a valid and effective international double taxation avoidance treaty regulating taxation and exemption of all possible kinds of income from international double taxation, a valid and effective international treaty or agreement on information exchange in tax matters for the area of income taxes, or that are contracting parties to a multilateral international treaty containing provisions on tax information exchange in the area of income taxes that is valid and effective for them and for the Czech Republic.
Withholding tax on income from the agreement to complete a job is creditable. Withholding tax on some of income from Czech sources is also creditable in the case of non-residents.
The employer withholds tax on employed income (monthly as a prepayment). The withholding tax is used for some special types of income. In other cases the income is taxed according to the annual tax return. Taxpayers of income tax (except for employees) are required to make prepayments at 6 months or 3 months intervals depending on the amount of their latest tax liability. The tax must be assessed and paid till beginning of April (till the beginning of July with tax adviser) and all prepayments must be cleared.
Local tax offices.