The area of taxation is generally governed by the Tax Code.
Taxes are either direct and depend on income, or indirect and relate to consumption (the purchase of goods and services).
There are nine different tax categories:
- Income tax - This represents the main tax duty. It is divided into income tax on natural persons (15%) and income tax on legal entities (19%).
- Value added tax (VAT) - VAT is an indirect tax applied to most taxable supplies in the Czech Republic. There are two different rates: a basic rate of 21% and a discounted rate of 15%.
- excise duty - this tax is applied to some specific types of goods (mineral oils, spirit, beer, wine, and tobacco products).
- Road tax - this applies only to vehicles used or intended for business. Tax rates are defined as fixed annual amounts.
Property tax - applied to land and buildings. In the case of land, the tax base is either the area or the value of the land. The tax rate depends on the quality, location and use of the land. In the case of bulidings, the tax base is the built-up area, and the rate depends on the type and use of the building. The tax period is the calendar year.
- Real estate transfer tax - this applies when transferring real estate for a fee. The unified tax rate is defined as 3% of the price of the real estate.
- inheritance tax - applies to assets acquired through inheritance. Certain groups are not subject to inheritance tax
- gift tax - a one-off tax which applies to the payment-free acquisition of assets. Certain groups are exempt from gift tax.
- environmental tax - this is a tax on electricity, natural gas and solid fuels
Each type of tax is defined in a specific law. The administration and collection of the individual taxes is the responsibility of the Ministry of Finance of the Czech Republic and its subordinate administrative bodies, particularly the local tax offices.
Under section 125 Paragraph 1 of the Tax Code, a tax subject who obtains a permit or acquires an authorisation to perform an activity that is a source of taxable income or the products of which are taxable, shall apply for registraion with the relevant tax office within 30 days. This time period starts on the day after the day on which the permit or authorisation enters into effect. The registration requirement thus applies to persons who have obtained, for example, a trade licence, concession, entry in the Commercial Register, or certificate of entry in the Chamber of Auditors, Lawyers or Tax Consultants.
Value added tax is regulated by the Value Added Tax Act. Under this Act, persons must pay the tax if their turnover exceeds CZK 1,000,000. Such persons (tax payers) must submit an application for registration within 15 days of the end of the calendar month in which this amount was exceeded.
Submitting your tax return
Tax returns may be submitted on the traditional printed form either at the relevant local financial office, or in electronic form in the Czech Tax Authority's e-submission (ESU) application.
Tax return forms:
The following governmental and non-governmental web portals offer further information and useful services on accounting and tax issues.