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Czech Republic - Other taxes and levies

Czech Republic - Other taxes and levies

Taxation of international executives

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Social security tax

Are there social security/social insurance taxes in the Czech Republic? If so, what are the rates for employers and employees?

Employer and employee

Type of insurance

Paid by employer

Paid by employee

Total

Social security

24.8.0%

6.5%

31.3%

- Pension insurance

21.5%

6.5%

28.0%

- Sickness insurance

2.1%

0.0%

2.1%

- Unemployment insurance

1.2%

0.0%

1.2%

Health insurance

9.0%

4.5%

13.5%

Total

33.8.0%

11.0%

44.8.0%

 

The above contributions (except for health insurance contributions) are calculated from the social security assessment base, which is subject to cap. For 2020, the annual cap amounts to CZK1,672,080.

There is no cap for health insurance contributions as of 1 January 2013.

Foreign employees, who have an employment contract under Czech or other than Czech law with a Czech company or Czech branch, are generally obliged to pay health and social insurance contributions. Since the accession of the Czech Republic to the EU as of 1 May 2004, the EC Regulation on Social Security is also applied, if relevant.

Seconded expatriates may be exempted from the obligatory contributions under certain conditions, only if their employer is from a country/jurisdiction with which the Czech Republic did not conclude a bilateral agreement on social security. For these purposes the EC Regulation represents a bilateral treaty, that is, the assignees, who are EU member nationals working in the Czech Republic are generally liable to make Czech obligatory contributions to the Czech scheme. Under certain conditions, they may be exempt from this obligation. For these purposes, the A1 certificate should be obtained.

As of 1 January 2012, remuneration paid to both statutory bodies of a limited liability company (jednatel) and to the members of a statutory bodies of joint-stock companies (members of board of directors, supervisory boards) for their executive activities shall be subject to health and social insurance. Obligation to pay social insurance contributions (sickness and pension insurance) however arises only if remuneration received for such statutory activities exceeds amount of CZK3,000 monthly.

Gift, wealth, estate, and/or inheritance tax

There is no wealth, estate and inheritance tax in the Czech Republic.

The gift tax is implemented into the Czech Income Tax Act. Income Tax (at the rate of 15 percent) is generally imposed on assets donated.

The tax legislation allows for an exemption from income tax of gifts between relatives, between the persons living in the same household for a period at least 1 year before the gift was provided and exemption applies under certain circumstances in case of gifts provided to the trust. Moreover, the gifts up to the annual value of CZK15,000 are generally exempt from the income tax.

Gifts provided abroad are generally subject to 15 percent withholding tax (in case of EU residents, EEA residents, bilateral double tax treaty country/jurisdiction residents or residents of a country/jurisdiction having a bilateral agreement on exchange of information in tax matters concluded with the Czech Republic) unless the relevant double tax treaty does not provide otherwise. Otherwise, 35 percent withholding tax is applicable.

Real estate tax

Are there real estate taxes in the Czech Republic?

This tax is paid by house and landowners.

The tax on land is based on the acreage and the prices of land in various parts of the Czech Republic. The tax rate for agricultural land ranges from 0.25 percent to 0.75 percent of the tax base, depending on the type of land and from CZK0.20 to CZK5 per m2 for other land. For building land (value of CZK per m2), the rate is further multiplied by coefficient determined by the size of the appropriate municipality; it varies from one to five.

The tax on houses and flats is based on the floor space.

The tax rate ranges between CZK2 to CZK10 and has to be increased by CZK0.75 for each other floor. The rate is further multiplied by a coefficient determined by the size of the appropriate municipality; it varies from one to five.

The final tax liability (for land as well as houses and flats) can be multiplied by local coefficient of two, three, four, and/or five if determined by municipality in the generally mandatory public notice.

Sales/VAT tax

Are there sales and/or value-added taxes in the Czech Republic?

There are two types of indirect taxes: value-added tax (VAT) which is charged on most supplies of goods and services; and excise duties which is charged on supplies of specific goods such as fuels, beer, wine, spirits, and tobacco.

Unemployment tax

Are there unemployment taxes in the Czech Republic?

Employers are obliged to pay unemployment contributions which are part of obligatory social security contributions.

Part of the contributions on social security is intended for a state policy of employment.

Other taxes

Are there additional taxes in the Czech Republic that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Local tax

There are no local taxes in the Czech Republic.

Land tax

There are taxes on land and buildings imposed on owners in the Czech Republic. These taxes are due annually. Please see the real estate tax section.

Nevertheless, it is not usually applicable to foreign nationals as their ability to own property in the Czech Republic is limited. For EU citizens, it was possible to own real estate in the Czech Republic since 1 May 2004 if certain conditions were met (such as the individual has a long- term residence permit in the Czech Republic). As of 1 May 2009, however, EU citizens and third country/jurisdiction nationals are able to own property in the Czech Republic without any restrictions.

Other taxes

The Czech Republic also imposes tax on the transfer of immovable property (mainly a sale of property). Generally, the seller is responsible for paying the tax and filing a tax return. The tax rate is 4 percent of the selling price of the immovable property regardless of the relationship of the parties concerned.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?
 

There is no specific duty of the taxpayer to report their offshore assets to the banks or to the tax administrator.

The individual taxpayers are obliged to report to the tax administrator their income higher than CZK5,000,000 if such income is exempted from personal income tax by the end of the period for filing an annual tax return.

Under certain circumstances the taxpayer is obliged to provide based on the tax administrator’s or Czech National Bank’s request with a declaration of the origin of their income. The tax authority is entitled to require such reporting in cases where the tax administrator has reasonable doubts that the taxpayer’s income reported do not correspond to their consumption.

Disclaimer

All information contained in this publication is summarized by KPMG Česká republika, s.r.o., the Czech Republic member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on the Income Taxes Act No. 586/1992 Coll. as subsequently amended, Act 280/2009 Coll.onTax Administration and on the social and health security legislation (Act No. 592/1992 Coll., No. 589/1992 Coll., No. 48/1997 Coll. and No. 54/1956 Coll.).

Copyright

© 2020 KPMG Česká republika, s.r.o., the Czech Republic member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.

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