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Czech Republic: Insurance tax amendments; excise tax rates on alcohol and tobacco

Czech Republic: Insurance tax amendments

Changes to the taxation of insurance companies are among the tax legislative items that were effective beginning January 2020.


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The new tax law will primarily affect insurance companies. Tax deductible provisions will be reduced by the amounts recoverable from reinsurance contracts and, simultaneously, increased by deferred acquisition costs for insurance contracts. Any impact of the transition to the new rules will be distributed over two tax periods after the amendment’s effective date. Additional taxes will therefore apply in 2020 and 2021.

One-crown bonds

Another provision concerns the taxation of one-crown bonds. For the tax periods after enactment, interest income from bonds with a low nominal value and issued before 2013 will not be rounded to the level of one security (this prior rounding led to the non-taxation of this income). In accordance with the new provision, the final tax per taxpayer (not interest income) will be rounded. This method of rounding will apply to all bonds, regardless of their issue date.

Excise tax, taxation of gambling winnings

The rates of excise taxes on spirits and tobacco products are increased.

The tax rate package includes a provision to limit the tax exemption of winnings from gambling to 1 million Czech crowns. Winnings exceeding 1 million Czech crowns will be subject to a 15% withholding tax. Also, the actual winnings cannot be less than the tax withheld.

Read a January 2020 report prepared by the KPMG member firm in the Czech Republic

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