Taxes in Europe Database v2
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.
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.
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.
The average depreciation rate of buldings depends on its category and the period varies from 20 to 45 years.
11% for first year and 22.25% for subsequent years.
5.50% for first year and 10.50% for subsequent years.
Other – accelerated depreciation
Depreciation rules didn´t change, it is only clarification.
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..
The limits are arm´s length and thin capitalization rules
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:
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).
There are two categories of tax relieves available to the taxpayers depending on number of their disabled employees.
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.
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.
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.
Outgoing dividends withholding tax
0.00 – 15.00 %
Outgoing interest payments withholding tax
15.00 - 35.00 %
00.00 - 35.00 %
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.
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.