TAXATION OF
INDIVIDUALS IN THE
CZECH REPUBLIC
TAXATION
Individuals are subject to income tax.
Taxable income and tax liability of
individuals are determined under the
Income Tax Law.
TAXATION
Taxable persons
1.
2.
Residents
Non-residents
TAXATION
1. Residents


An individual is considered to be a
resident of the Czech Republic:
permanent home (residential address)
> 183 days in the Czech Republic in
relevant calendar year, except stay for
studies or medical treatment
TAXATION
Taxable income
Resident individuals are subject to tax
on their worldwide income received in
monetary or non-monetary income.
TAXATION
Following income and capital gains are
subject to income tax:





employment income (salary/ benefits in
kind, pension, director’s remuneration)
business and professional income
(royalties and licence fees)
income from capital (investment
income, capital gains)
rental income and
other income
TAXATION

Other income:
– income from occasional activities
> CZK 20,000 (2015: 30,000)
– capital gains on the sale of non-business
assets, unless exempt
– sale of property rights
– alimony payments and pensions if not
exempt
– settlement payments and liquidation
proceeds of companies and partnerships
TAXATION
Every individual is taxed separately.
The net result (income minus
deductible expenses) is subject to a
flat tax rate + solidarity
surcharcharge.
Certain items of income are taxed
separately by way of a final
withholding tax rate.
TAXATION
Personal deductions, allowances
A.
B.
Deductions
Tax credits
TAXATION
A.



Deductions
Following items are deductible:
donations for charitable purposes,
described by law and deductible after
a threshold. Including established in
EU, Norway and Iceland.
mortgage interest for the main
residence up to CZK 300,000 per year
premiums paid for private life/state
insurance up to CZK 12,000 per year.
TAXATION
B.
Tax credits
Resident and non-resident individuals
may deduct from their aggregate
income a at least a basic personal
allowance for spouse and children.
The credits may only be used
(deducted) up to taxpayer’s tax
liability. As of 2015 a tax credit of CZK
3,000.
TAXATION
Losses
Any negative result of the category of
employment, capital and other income
cannot be negative. Any negative
result of the category of business and
professional income can be set off
against a positive result of rental
income. If the aggregate income
(excluding employment income,
capital income and other income) is
negative, losses may be carried
forward for five taxable periods.
TAXATION
Tax rates
The tax rates consist of a flat rate of
15%.
(As of 2015 19%.)
For the tax years 2013-2015 an
additional 7% solidarity surcharge
applies, which exceeds four times the
annual average salary (CZK 1,242,432)
TAXATION
Withholding tax
Following items of income derived by
residents from domestic sources and
are subject to a final withholding tax
at a rate of 15%:
TAXATION




dividends and other distributions
interest on bonds
Interest and other yields on money held
in savings accounts, deposit accounts or
non-business current accounts
Benefits from a state-contributory
supplementary pension insurance or
from a private life insurance, reduced
by the premiums paid.
TAXATION

From 2015 dividends and other profit
distributions derived by resident
individuals from resident companies
will be exempt.
TAXATION
Taxable period
Income tax is assessed annually. The
taxable period is generally the
calendar year. Individuals with an
aggregate income exceeding CZK
15,000 must file a tax return.
Entrepreneurs deriving income from
agriculture or trade may choose a
different financial year upon approval
of the authorities.
TAXATION
2. Non-residents
Individuals who do not have their
permanent residence in the Czech
Republic are treated as non-residents.
TAXATION
The income of non-residents is
generally taxed (15% or 35%)
according to the rules applicable to
residents, unless a law or tax treaty
provides otherwise.
If 90% is derived from Czech sources
the non-resident is entitled to
deductions which residents are entitled
to. As of 2015 only for EU member
states incl. Norway and Iceland.
TAXATION
Non-residents are entitled to the basic
personal tax credit.
TAXATION
Non-residents are subject to the
general withholding tax unless special
rules apply:
TAXATION

Remuneration paid to non-resident
members of statutory executive and
supervisory bodies of resident legal
entities is subject to a final
withholding tax at a rate of 15 or
35%.
TAXATION

Income from independent activities
and from services provided in the
Czech Republic is subject to a final
withholding tax at a rate of 15% or
35%.
TAXATION

A rate of 15% or 35% applies to
royalties and to income from the
leasing of movable assets.
TAXATION
Scheme income tax




Income minus deductions
Income tax (flat & withholding tax)
Less: tax credits
Payable/refundable income tax.
TAXATION
Social Security



Employees and self-employed persons
are liable to social security
contributions.
Contribution for employed: 11%
Contribution for self-employed: 45%
TAXATION