Paying Taxes in The Czech Republic

1. What is the corporate tax in the Czech Republic?

A Czech company has to pay a corporate income tax rate of 19%, with a rate of 5% for pension funds, investment funds and share funds. The corporate tax has to be paid for the worldwide income.

2. What is the VAT in the Czech Republic?

The standard VAT rate in the Czech Republic in 20%. However, there are still services and good that are only subject to a 10% VAT rate.

3. How can the VAT be refunded in the Czech Republic?

In order to obtain a VAT refund in the Czech Republic, you must submit an application in Czech through the tax portal of the residence country no later than September 30th of the calendar year following the refund period. Only an electronic copy of invoices that exceed the threshold of EUR 1.000 must be submitted with each application.

4. What is the dividend tax in the Czech Republic?

Dividend distributions between Czech companies are exempt from tax only if the parent company maintains a holding of at least 10% of the distributing company for one year. Dividends paid to nonresidents are subject to a 15% withholding tax, unless there is a reduction in a tax treaty.

5. Are there any incentives for foreign investors in Czech Republic?

The Czech Republic is one of the most attractive states in the Eastern Europe for foreign investors. Incentives including tax relief are governed by the Investment Incentives Act. Corporate tax exemptions for a period of five years are provided for new investments. There are also offered grants per employee and for training, which can reach a maximum of 50,000CZK (2000 EUR).

6. Why do I need a local accountant for my local business in the Czech Republic?

It is advisable to hire a local accountant in order to be dealing with accounting issues in a faster way, especially if you have an experienced person, who has worked in the Czech tax system before and know very well the accounting legislation.