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Last partial update, April 2009 The czech income tax rate for individual's income in 2009 is flat, a 15% rate. Corporate tax in 2009 is 20%. There is a reduced tax rate for certain income. The rate of corporation tax is reduced constantly to encourage economic activity, so that for instance, the rate of corporation tax in 1992 was 45% as compared to the present rate of 20%. Czech Republic Taxation of Individuals An individual pays tax on his income as a wage earner or as a self-employed person. Tax for an individual who meets the criteria of a "permanent resident" of the Czech Republic is calculated on his income earned inside the Republic and abroad. A foreign resident who is employed in the Czech Republic pays tax only on income earned in the Republic. An employer is bound to deduct, immediately on a monthly basis, the requisite tax from employees salaries. A self-employed person must prepay taxes that will be offset on making an annual tax return. The advances are determined on the basis of the previous year's tax return. In the case of a new business, the prepayments are calculated on the basis of estimates made by the owner of the business. Certain payments are deductible from taxable income as will be specified later. Czech Republic Reporting Dates The tax year in the Czech Republic is the calendar year ending on December 31. If your income is derived solely from a salary, you are not bound to file a yearly return. In all other cases, the annual return must be submitted by March 31 (3 months after the end of the tax year). If you are represented by an authorized Czech tax advisor, you may make an application to submit the return by June 30. A delay in submitting an annual return will entail fines, in most cases, of 10% of the tax payable. Fines are imposed even after tax has been prepaid. Czech Republic Corporate Tax Czech Republic Capital Gains Czech Republic Depreciation of Fixed Assets The regulations on depreciation were amended in 1999 to enable a company to depreciate an asset over a shorter period than in the past. As a general rule, the classes of fixed assets are divided into 6 groups (categories).
The company may select either the straight line or the accelerated method of depreciation. However, during the period of depreciation, the company may not alter the method of depreciation. Similarly, should the ownership of the asset change during the period of depreciation, the new purchaser may not alter the method of depreciation that was selected by the original owner. Czech Republic Losses In the Czech Republic losses can be carried forward for 5 years. Czech Republic Consolidated Account Consolidated tax returns are not allowed in the Czech Republic Czech Republic Deduction of Tax at Source Czech Republic Social Security: Mandatory social and health insurance payments are: Employer - 34%. Employee - 11%. Czech Republic Other Deductions Tax is duducted at source from the following payments to non-residents: Dividends-15%. Royalties-15%. Interest-15%. Note: from 2005 payment of dividend between EU companies, subject to conditions, is exempt from withholding tax. |
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