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Measure Name
Date when measure came into force
Incorporation of inheritance and gift tax 2014/01/01
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Generic Tax Name Corporate income tax
Tax name in the national language Daň z příjmů právnických osob
Tax name in English Corporate income tax
Member State CZ-Czech Republic
Tax in force since 1993/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Act No. 586/1992 Coll., Income Taxes Act, latest amendments No. 209/1997, 210/1997, 227/1997, 111/1998, 149/1998, 168/1998, 333/1998, 129/1999, 144/1999, 63/1999, 170/1999, 225/1999, 3/2000, 17/2000, 27/2000, 72/2000, 100/2000, 103/2000, 121/2000, 132/2000, 241/2000, 340/2000, 492/2000, 117/200, 120/2001, 239/2001, 453/2001, 483/2001, 50/2002, 128/2002, 198/2002, 210/2002, 308/2002, 260/2002 by Constitutional Court Finding No. 236/2011, 575/2002, 162/2003, 362/2003, 438/2003, 49/2004, 19/2004, 47/2004, 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, 193/2008, 304/2008,306/2008, 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, 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, 503/2012Coll., 44/2013, 80/2013, 105/2013, 160/2013, 215/2013 , 241/2013, and Legal Action of the Senate 344/2013 Coll. 162/2014,182/2014, 247/2014, 267/2014, 458/2011 (part), 332/2014 Coll.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

Law No. 218/2000 Coll., 243/2000 Coll.

 

Central government - about 67,5 % of total receipts.

Municipalities and regions - about 32,5 % on the basis of population.

The corporate income tax on profits earned by municipalities and regions through their own commercial activities is direct revenue of those municipalities and regions.

 
Geographical Scope Czech Republic.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

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.

The income from inheritance is exempted from income tax.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments
 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

The average depreciation rate of buldings depends on its category and the period varies from 20 to 45 years.

Average depreciation period 40  Years
Average depreciation rate 2.5 %
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

11% for first year and 22.25% for subsequent years.

Average depreciation period 5  Years
Average depreciation rate 20.0 %
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

5.50% for first year and 10.50% for subsequent years.

Other – accelerated depreciation

Depreciation rules didn´t change, it is only clarification.

Average depreciation period 10  Years
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Depreciable intangible assets are divided into two categories intangible assets that may be used for a definite time period and those that may be used for an indefinite time period. Intangible assets that may be used for a definite period are depreciated proportionally during such period. If the period for use is indefinite, the intangible asset is depreciated proportionally over the following periodsdetermined for particular type of intangible asset:

- audiovisual works 18 months,

- SW and RD results 36 months,

- incorporation expenses 60 months,

- other intangible assets 72 months..

Average depreciation period
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

The limits are arm´s length and thin capitalization rules


Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
5  Years  
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments


Comments

Deductions:

Depreciation allowances for tangible assets with a useful life of more than 1 year are granted in six depreciation categories (3 years, 5 years, 10 years, 20 years, 30 years and 50 years); there is a choice of linear or accelerated depreciation. Taxpayers are allowed to interrupt the tax depreciation.

Depreciation allowances of intangible assets to which a taxpayer has the right of use for a definite period of time shall be computed when the input price is divided by the period agreed in the relevant contract. In other cases depreciation of an intangible asset shall be written down evenly without interruption, namely an audiovisual work 18 months, software and intangible results of research and development 36 months, incorporation expenses 60 months and other intangible assets 72 months.

Reserves and provisions for bad debts are tax deductible under certain conditions specified in the Act on Reserves for the Purposes of Determining Income Tax Base No. 593/1992 Coll. as amended.

There are different types of tax incentives:

  1. As of 2000, incentives for large scale investments meeting certain conditions (investment of at least 100 million CZK in 3 years in the manufacturing industry, qualifying as high tech and as environmentally friendly); corporate income tax may be exempt for 10 years. During the application of the tax bonification the taxpayer is obliged to comply with certain defined conditions (e.g. he has to maintain the investment for 5 years, he is prohibited to take use of optional possibilities of deferral of tax duty which is first of all interruption of tax depreciation and he is, furthermore, not allowed to perish for example through merger).

  2. There are two categories of tax relieves available to the taxpayers depending on number of their disabled employees.

  3. In addition, a taxpayer may deduct from his tax base more than 100 % of costs incurred in the implementation of research and development projects in the given taxable period. Since 2015, there are redefinition of deductions (the amount of the deduction varies depending on the cost increases between two consecutive periods.

  4. Since 2014 can be applied deduction for taxpayers:
    - Deduction to support the acquisition of assets of the employer for training purposes between 50 and 110% of the acquisition cost of property by the time of its use of pupils and students.
    - Deduction on expenditure incurred for support pupil or student in vocational education is a product of 200, - CZK and the number of hours of practical education in secondary schools, professional practice in colleges and educational activities under Part accredited study programs at universities, carried out in a particular period at the employer's workplace -the taxpayer.
    - Limited purpose of incentive compensation, which includes a stipend, allowance for meals, accommodation, fares and personal protective equipment. The initial amount for secondary school pupils was increased from CZK 2,000 to CZK 5,000 students at colleges and universities from CZK 5,000 to CZK 10,000.

Tax losses may be carried forward for 5 years.

Exemptions:

Mainly following income is exempt:

  • specified income in accordance with implemented Council Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States

  • income of specified state entities which are only involved in redistribution of received financial resources (taxation would mean the reduction of level of redistribution)

  • income pursuant to Council Directive 2011/96/EU, as mentioned above

  • exemption of dividends is from 2008 extended also to dividends received from subsidiaries established out of the European Union in states which the Czech Republic settled a double taxation treaty with

  • from 2008 it is possible to apply an exemption of income received from the transfer of parent companies´ shares in qualified subsidiaries (located both in the European Union and abroad) when the parent company is a tax resident of the Czech republic or a permanent establishment of a tax resident of Member State of the European Union located in the territory of the Czech Republic.

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 19.00 %

Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 0.00 %


Comments

Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 19.00 % 19.00 %
Outgoing dividends withholding tax
Outgoing interest payments withholding tax
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Outgoing dividends withholding tax

0.00 – 15.00 %

Outgoing interest payments withholding tax

0.00 – 15.00 %


Comments   Non-treaty countries

Outgoing dividends withholding tax

15.00 - 35.00 %

Outgoing interest payments withholding tax

00.00 - 35.00 %

 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
1993/01/01
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio: 1 : 4
Definition numerator
Definition denominator loans
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold 25.00 %
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

All payers of income tax 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 within 3 or 6 months from the end of business year. All previous prepayments must be cleared.

 
Tax collector

Tax offices.

 
Special features

As of 2012, companies running gambling activities are taxed pursuant to Income Taxes Act. In addition, the companies running gambling activities pay a levy, which shall be 20%. Newly, the levy is income of state budget (70%) and municipal budget (30%). In case of gambling machines, the allocation is in proportion: 20% state budget and 80% municipal budget.

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51b (d51ba + d51bb + d51bc)

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 127,480.00 CZK 3.15
2011 129,030.00 CZK 3.21
2010 127,404.00 CZK 3.22
2009 132,327.00 CZK 3.37
2008 161,948.00 CZK 4.03
2007 171,178.00 CZK 4.47
2006 153,712.00 CZK 4.38
2005 134,989.00 CZK 4.14
2004 128,665.00 CZK 4.21
2003 118,881.00 CZK 4.24
2002 106,730.00 CZK 3.99
2001 94,393.00 CZK 3.68
2000 76,178.00 CZK 3.21
1999 79,458.00 CZK 3.55
1998 67,464.00 CZK 3.15
1997 69,357.00 CZK 3.55
1996 56,510.00 CZK 3.12
1995 67,255.00 CZK 4.26

Comments