Czech Taxes 2013

On November 7, 2012, the Chamber of Deputies of the Parliament of the Czech Republic adopted a legislation that, if approved by the Senate of the Parliament and the President, will change Czech tax rates from 2013. The most important news are:

1.   Value added tax (VAT)
The basic tax rate increases by 1 % to the new rate of 21 %.
The reduced tax rate (food, books, health care etc.) increases also by 1 % to 15 %.

2.   Personal income tax
Czech personal income tax is still calculated from the so-called "super-gross" wage (i.e. gross wage plus social and health insurance paid by the employer on behalf of the employee). The tax rate is 15 % as it has been last years (i.e. approximately 21 % from the gross wage); however, there is a new progressive taxation (so-called "social tax") in case of the income which exceeds CZK 100,000 (approximately EUR 4,000); the tax rate is then higher by 7 %. For example the rate of income tax of a person who earns CZK 160,000 will be 15 % from the CZK 100,000 and 22 % from the over CZK 100,000 exceeding income of CZK 60,000 (both calculated from the super-gross wage).

Starting 2015, Czech income tax shall be calculated from the gross wage and the tax rate shall be 20 %. However, the Ministry of Finance planes this amendment to be effective already from the year 2014.

3. Corporate income tax
The rate of Czech corporate income tax shall not change and the rate remains 19 %.

4. Real estate transfer tax
The rate of Czech real estate transfer tax shall increase by 1 % to 4 %.

The possible veto by the Senate or President can be countervoted by the absolute majority (101 members) of the Chamber of Deputies. In case this amendment will not become effective, the VAT tax will change to 17,5% for all types of goods and services as already amended before.

This article was provided by Prague Connect with the cooperation of the law offices of rutland ježek.

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