Czech Republic
Scope of Income Tax
Corporate Income Tax is payable
by any legal entity (not individuals) where
the registered place of business is in the
Czech Republic. This liability for income
tax applies to income derived from business
activities within the Czech Republic and
worldwide. Where an entity is conducting
business in the Czech Republic but does not
have a permanent, registered address there,
income tax is limited to income within the
Czech Republic. There are certain double
taxation treaties in force with other countries
and the terms of these treaties may affect
the amount of tax paid.
Corporate income tax is generally payable
on income derived from business activities
and the sale of property. Certain organisations
including charitable foundations and public
health associations are exempt from tax provided
they meet relevant criteria.
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Czech Republic Income Tax Rates
The corporate income tax rate is 20% and
is set to reduce to 19% in 2010. There
is a tax on dividends of 15% (withholding
tax), unless the dividend is paid from
one Czech company to another. Income
from interest is charged at the standard
rate of 20%. Income from investments
and pension funds is taxed at the lower
rate of 5%.
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Czech Republic Calculation of Taxable Base
Tax-deductible expenses are allowed, provided
the expenses have been incurred to ensure
the generation and maintenance of taxable
income. Donations to charities and costs
associated with research and development
are tax deductible. Capital gains are
taxed at the standard corporate income
tax rate – there is no separate
capital gains tax.
Tax losses may be carried forward for five
years. Depreciation for predefined assets
is allowable by straight-line or accelerated
methods. The period of depreciation depends
on the asset. Depreciation of certain intangible
assets is also allowed, provided the original
cost of acquisition exceeded CZK60,000.
Czech Republic Filing Requirements and Payment
of Tax
The tax period is defined as either the calendar
year or another 12-month period coinciding
with the foundation of a business (i.e.
its economic year). Where a previous
tax liability exceeded CZK30,000, a business
must make advance tax payments in respect
of a current year. Only businesses (including
sole traders) that are defined as residents
of the Czech Republic must complete a
tax return.
The tax return must be submitted within
three months of the end of the taxation period
(i.e. for a calendar year by March 31). The
return must be submitted to the relevant
local tax authority governing the area in
which a business is located. Forms are available
in hard copy or online from the Finance Ministry
website. Payment of tax due must be made
within three months of the end of the tax
period to which the return refers.
Tax penalties are imposed for late submission
of returns and late payment of taxes, to
the amount of 0.1% of the amount due for
each day it is late. After the first 500
days, penalties accrue at the rate of 140%
of the Czech National Bank discount rate.
The deadline may be extended in certain circumstances,
e.g. if a tax adviser has been appointed
to submit the tax return on behalf of the
legal entity.
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Czech Republic Withholding Taxes
Income that is subject to withholding tax
includes:
Lowtax Network Portal
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Tax Jurisdictions
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