Tax System of the Czech Republic
Division of taxes direct indirect Income tax Road tax Real estate tax Inheritance and gift tax, real estate transfer tax Value added tax Excise duties Environmental protection taxes
Principles of tax systems of EU countries simplicity elasticity and force of tax collection justice of taxation
Definitions Tax - obligatory payment of individuals and legal entities to the state budget. Taxpayer a person who is charged with taxes (direct taxes) and a person who is obliged to count and pay taxes to tax administrator (indirect taxes). Tax administrator Tax Office, Central Tax Office, Ministry of Finance
INCOME TAXES ACT No. 586/1992 Coll. Practically all types of income of individuals and legal entities are liable to this Act.
Types of income (Personal income tax): income from dependent activity and emoluments of office-holders, income from business activity and other independent gainful activity, income from capital, income from leasing, other income.
Tax exemptions: income from sale of a family house, a flat for at least two years immediately before the sale, income from the sale of real estate, nonresidential premises provided that the period between their acquisition and sale exceeds five years, credits and loans, a prize won in a public competition, advertising competition or draw or a sporting competition provided that the prize does not exceed the value of CZK 30,000, income received in the form of benefits and services provided from sickness insurance, pension insurance, state social support, scholarships financed from the state budget, regional budget and public university funds...
Tax base TB = I E TB 1 + TB 2 + TB 3 = TB The tax base does not include tax-exempt income and income which is liable to a special rate of tax.
Tax TB x rate = tax - R
Tax reliefs basic relief for a spouse s own income if it does not exceed CZK 68,000 in the taxable period CZK 24,840 CZK 24,840 recipient of a partial disability pension recipient of a full disability pension CZK 2,520 CZK 5,040 ZTP/P card holder CZK 16,140 dependent child CZK 15,204, 19,404, 24,204 taxpayer is engaged in systematic studies CZK 4,020
Annual income tax rate 15%
1. Income from dependent activities Income from employment, a service or membership relations or similar kind of relationship in which the taxpayer must follow his employer s instructions when carrying out his work. payer an employer taxpayer an employee
- regular income and income paid in the form of a lump sum, e.g.: wages, premium, extra pays, scholarships provided by employer, profit shares, in-kind payments, income provided by employer to employees over tax limits set forth by other regulations
Calculation of income tax from dependent activities: TR = I + Insurance social insurance + health insurance (34% from gross wage)
Advances on taxable remuneration: tax advance = TR x rate - R income tax rate 15% 1/12 of tax relief (s)
2. Income from business activity and other independent gainful activity - income from agricultural production, forestry and management of water-covered areas, - income from a trade, - income from other business activity according to statutory provisions, - the shares of partners in the profits of a general commercial partnership or the shares of the profits of unlimited partners in a limited partnership.
Calculation of income tax from business activity (an entrepreneur claims expenses in his tax evidence) I E = TB TB x rate = income tax - R annual rate of income tax relief
I= 900,000 CZK, E= 750,550 CZK TB = 149,450 CZK 149,400 IT = 149,400 x 0.15 = 22,410 22,410 24,840 = - 2,4430 = 0 CZK (zero tax)
Calculation of income tax from business activity (an entrepreneur does not claim expenses in his tax evidence) An entrepreneur can claim expenses in the amount of: a) 80% of his income derived from agricultural production, forestry and management of watercovered areas, b) 80% of his income from professional trades c) 60% of his income from other forms of trades b) 40% of his income derived from the use or provision of industrial or other intellectual property and from copyright, from other forms of business activities.
3. Income derived from capital proportionate parts in profits based on business interest in a joint stock company or a limited partnership or based on a membership in cooperative, interest, winnings and other yields related to deposits in saving accounts, a silent partner s share in profits resulting from his participation in a business activity, yields on certificates of deposit and similar deposits, interest and other yields on granted credits and loans
Calculation of income derived from capital: This income almost cannot be reduced by expenses! I x special rate = income tax 15%
4. Income from leasing (rental income) - income from leasing of real estate or flats, - income from the leasing of movables.
Calculation of rental income: The same as in income from business activity. In the case that an individual does not claim expenses documented to reduce his tax, it is possible to claim them as 30% from his income!
5. Other income - income derived from occasional activities or occasional leasing of movable assets, - winnings in lotteries, betting and other games of chance and prizes won in advertising competitions, - prizes from public competitions, sporting competitions...
Calculation of the income tax: This income is tax-exempt, unless its amount in the taxable period exceeds CZK 30,000! I (E) = TB TB x annual rate = IT - R
Tax Return Tax is not prescribed if it does not exceed CZK 200 or if the total taxable income does not exceed CZK 30,000.
Corporate Income Tax Taxpayers liable to corporate income tax are entities (not individuals). Taxpayers not having their seat in the Czech Republic are liable to tax on income arising only from sources in the Czech republic.
Taxable period: a calendar year, an economic year (twelve successive months.
Tax Base is the amount by which income exceeds expenses. Tax rate 19%