Czech Republic
ey.com/globaltaxguides
Prague GMT +1
EY
Na Florenci 2116/15
110 00 Prague 1 Czech Republic
Executive and immigration contacts
Martina Kneiflova
Ondrej Polivka
Michaela Felcmanova
Jarmila Kozakova
Adam Linek
Radka Ruzickova
Helena Nastoupilova
Stanislav Kafka
Immigration contacts
Jan Lachmann
Eva Babincová
A. Income tax
+420 225-335-295
Email: martina.kneiflova@cz.ey.com
+420 225-335-595
Email: ondrej.polivka@cz.ey.com
+420 225-335-949
Email: michaela.felcmanova@cz.ey.com
+420 225-335-762
Email: jarmila.kozakova@cz.ey.com
+420 225-335-049
Email: adam.linek@cz.ey.com
+420 225-335-599
Email: radka.ruzickova@cz.ey.com
+420 225-335-958
Email: helena.nastoupilova@cz.ey.com
+420 225-335-426
Email: stanislav.kafka@cz.ey.com
+420 225-336-127
Email: jan.lachmann@cz.ey.com
+420 225-336-511
Email: eva.babincova@cz.ey.com
Who is liable. Czech residents are subject to tax on their worldwide income. Nonresidents are subject to tax on Czech-source income only. There is no special regime applicable to Czech tax nonresidents. However, Czech nonresidents may not qualify for certain tax-deductible items and tax reliefs.
The term “resident” includes any person residing in the Czech Republic for at least 183 days within a calendar year or having a residence (permanent home) in the Czech Republic. Employment income received by a nonresident whose employment activity in the Czech Republic does not exceed 183 days during any 12 successive calendar-month period is exempt from tax in the Czech Republic if it is paid by a foreign entity without a permanent establishment in the Czech Republic and if no economic employment exists in the Czech Republic.
Income subject to tax. The taxation of various types of income is described below.
Employment income
Employment income includes salaries, wages, bonuses, other compensation of a similar nature and most benefits in kind. Employment income also includes fees paid to directors of private companies, shareholders of private limited
companies and limited partners of limited partnerships for work performed for the company or partnership, regardless of whether their position with the entity is one of authority.
The tax base for employment income equals the gross employment income.
Individuals assigned by a foreign employer to the Czech Republic who continue to be employed and paid by the foreign employer, and who perform work for and under the instruction of a Czech resident individual or legal entity (the so-called “economic employer”), are deemed to be employed by the Czech resident individual or legal entity, and their employment income is subject to monthly payroll tax withholding.
Self-employment and business income Taxable self-employment and business income consists of income from business activities and professional services, less deductible expenses. Authors, lecturers, athletes and artists are considered providers of professional services. Net income from business activities and professional services is subject to tax with other income at the rates set forth in Rates
Investment income. Czech-source interest income derived from personal investments is subject mostly to a 15% final withholding tax. However, if the source of the interest income is part of the individual’s business activities, the interest income is taxed in the individual’s tax return. Other investment income, including dividends and limited partners’ shares of partnership profits, is subject to a 15% final withholding tax. Nonrecurring income (for example, arbitration awards or bond repayments) is generally taxed with other ordinary income at the rates set forth in Rates
A 35% final withholding tax applies to the abovementioned types of income (other than income from lease-purchase contracts) subject to final withholding tax for tax residents of countries that have not entered into a valid double tax treaty or treaty on exchange of information with the Czech Republic.
Dividend and interest income derived by a resident from foreign sources is taxed in the individual’s tax return. A separate tax base with a rate of 15% may apply to selected types of non-Czech investment income (for example, dividends and interest income), if selected by the individual within the tax return.
For the rates applicable to certain types of income of nonresidents, see Rates
Rental income. Income derived from the rental of immovable and movable assets is taxed in the annual tax return together with other types of income at the rates set forth in Rates
Capital gains and losses. Capital gains derived from the sale of property acquired for the purpose of resale or exchange for profit are taxed as ordinary income at the rates set forth in Rates Capital gains realized from the sale of real estate or personal property not acquired for resale are generally exempt from income tax if the minimum required holding period is met. The minimum required holding periods are 12 months for automobiles, two years for a primary residence and 10 years for other immovable property. Other holding periods apply to other types of personal property.
European Union (EU) countries, Iceland and Norway if their Czech-source income accounts for at least 90% of their total annual income. To apply the tax reliefs, Czech tax nonresidents must submit the official confirmation of the worldwide income provided by the foreign tax authorities.
Relief for losses. Losses incurred in self-employment or rental activities may be carried forward for five years, and they are creditable against defined types of the income only. Effective from July 2020, losses may also be utilized in the two tax periods preceding the period in which the loss is incurred.
B. Inheritance and gift taxes
Effective from 2014, inheritance and gift taxes are incorporated in the income tax; that is, the same basic rules apply to the taxation of gifts. In general, Czech residents are subject to tax on their worldwide gifts, and nonresidents are subject to tax on Czech-source gifts only.
The following groups of gifts are exempt from tax:
• Gifts received from lineal relatives, a spouse, minor relatives, such as brothers and sisters, lineal relatives of a spouse, children’s spouses, nieces, uncles and aunts
• Gifts received from persons who lived with the transferor longer than one year in one household
• Property of a beneficiary that has been allocated to a trust fund by any of the persons mentioned above
• Gifts received occasionally up to the amount not exceeding of CZK50,000 per year from one individual
All taxpayers are exempt from inheritance tax.
C. Social security
Contributions. Social security and health insurance contributions are paid by both the employer and the employee on employment income at the following rates.
There is no maximum assessment base for health insurance.
The maximum assessment base for social security contributions equals 48 times the monthly average salary. For 2024, the maximum annual assessment base for social security contributions is CZK2,110,416. Income above the limit is not subject to social security contributions, with certain exceptions for situations in which the individual has multiple employers during the year. In such circumstances, the maximum assessment base applies to each employer separately. However, the employee remains subject to one maximum assessment base.
EU social security legislation and totalization agreements. As a Member State of the EU, the Czech Republic is bound by the EU
Social Security Regulations (currently applicable to all Member States of the European Economic Area (EEA) and Switzerland) and other EU law. In addition, to prevent double social security taxation and to assure benefit coverage, the Czech Republic has entered into totalization agreements with several non-EU jurisdictions, including Albania, Australia, Belarus, Bosnia and Herzegovina, Canada, Chile, India, Israel, Japan, Korea (South), Moldova, Mongolia, Montenegro, North Macedonia, Quebec, the Russian Federation, Serbia, Syria, Tunisia, Türkiye, Ukraine and the United States.
D. Tax filing and payment procedures
The tax year for individuals is the calendar year. Individual tax returns must be filed by 1 April of the following year. Extensions may be granted until 1 July. By additional application, the deadline may be extended to 31 October for Czech tax resident individuals who must include foreign-source income in their Czech tax return. The tax is due by the deadline for filing the tax return.
Czech employers must withhold monthly payroll tax advances from all compensation paid to their legal or deemed (economic) employees.
Joint tax filing of married couples is not available in the Czech Republic.
Effective from 2015, individuals must submit a notification of tax-exempt income exceeding CZK5 million received after 1 January 2015 to the Czech tax authorities. Such income must be reported to the tax authorities by the deadline for filing the tax return. Fines of up to 15% of the tax-exempt income can be levied for failing to meet the obligation. Individuals who are not required to file a tax return must also file this notification.
E. Double tax relief and tax treaties
The Czech Republic has entered into double tax treaties with the following jurisdictions.
Albania Hungary Philippines
Armenia Iceland Poland
Australia India Portugal
Austria Indonesia Qatar
Azerbaijan Iran Romania
Bahrain Ireland Russian Federation
Bangladesh Israel San Marino
Barbados
Jordan Saudi Arabia
Belarus Kazakhstan Senegal
Belgium Korea (North) Serbia and Bosnia and Korea (South) Montenegro
Herzegovina
Botswana
Kuwait Singapore
Kyrgyzstan
Slovak Republic
Bulgaria Latvia Slovenia
Canada Lebanon South Africa
Chile Liechtenstein Switzerland
China Mainland Lithuania Syria
Colombia Luxembourg Tajikistan
Croatia Malaysia Thailand
EU nationals need to be registered at the Labour Office by a company for which they perform their work on their first working day at the latest. In addition, they must process their registration with the Czech Foreigner’s Police within 30 days after their arrival (if not processed via a hotel). A temporary residence certificate (Registration Certificate) is not mandatory but is recommended if the EU national intends to stay and/or work in the Czech Republic for a period exceeding three months, because it is usually needed for car registration, obtaining a parking permit, closing a contract with a phone provider, buying property in the Czech Republic and other transactions. EU nationals must be covered by health insurance during their stay in the Czech Republic. An EU Health Insurance Card satisfies this requirement.
Family members of EU nationals from third countries are subject to a preferable treatment (compared with other non-EU nationals) if they accompany or follow the EU national residing in the Czech Republic. Registration at the Foreigner’s Police and mandatory application for a temporary residence permit apply to them.
Business visitors. In general, a non-EU national who is in the Czech Republic on a short-term (few days) business trip is not required to have a working permission if no productive/hands-on work is provided. Non-EU nationals from countries with a free visa regime are not required to obtain a visa to travel to the Czech Republic and can travel for non-working business trips based on their passport only. Non-EU nationals from countries with a visa requirement need to apply for the business type of visa to be able to enter the Czech Republic.
Students. Students from non-EU countries intending to study in the Czech Republic for a period exceeding 90 days may apply for a long-term study visa. Students from non-EU countries with the visa-entry obligation may need a study visa for a short-term study stay under 90 days. Non-EU students intending to work in the Czech Republic do not need to obtain work permits if they are studying or have completed studies at a Czech high school, university or artists’ school accredited in the Czech Republic.
Trainees. A special regime may be applied to non-EU national trainees assigned to the Czech Republic. These individuals may apply for the same immigration permits as the standard assignees or undertake a simplified immigration procedure. This simplified procedure avoids the obligation to apply for a work permit or Employee Card if the trainees’ work in the Czech Republic will not exceed six months and the substance of the work will be experience and training for their future career in a “home country company.” Before the assignment of trainees, the Czech company may qualify for the simplified procedure by filing a special request and meeting certain conditions.
Termination of the stay. The termination of work in the Czech Republic for both EU nationals and non-EU nationals must be reported to the Labour Office. In addition, non-EU nationals must inform the Ministry of Interior about the termination of their stay and return the relevant residence permit (if applicable).
G. Work permits, Employee Cards, intra-corporate transfers, Blue Cards and governmental programs
Local employees. A company intending to employ a non-EU national in the Czech Republic must register a job position with the Czech Labour Office. This registration is public, and the Czech Labour Office has 30 days to fill the position with a Czech or other EU national. If no appropriate candidate is found in the Czech Republic or in other EU countries, the position is registered in the official database for Employee Cards and a non-EU national can apply for it by filing an application at the Czech embassy or consulate in his or her country of residence. The application for the Employee Card must be supported by the local employment contract or agreement on the future contract between the applicant and the Czech company. This contract must meet certain criteria relating to a working schedule and level of salary.
If the Ministry of Interior approves the application, the Czech embassy or consulate issues a special visa to the applicant to allow him or her to enter the Czech Republic and register with the Czech Ministry of Interior. On the finalization of this process, the non-EU national obtains the Employee Card in the form of a plastic biometric residence permit.
Assigned individuals. Assigned individuals (individuals who do not have a local employment contract) are required to apply for a work permit in the Czech Republic. After the work permit application is filed with the respective Labour Office, they are allowed to apply for the non-dual Employee Card. A Czech company must inform the Czech Labour Office about the assignment of a non-EU national to the Czech Republic. No testing of the Czech or EU labor market is required. On the collection of the work permit (to be delivered with the Employee Card application) and approval of the Employee Card application, the process of entering the Czech Republic and collecting the Employee Card is the same as in the case of local employment.
The following assigned individuals (and some others) are exempt from the work permit obligation and need apply only for the nondual Employee Card:
• A holder of a Czech permanent residence permit
• A foreigner who undertakes or completes studies at a high school or university accredited in the Czech Republic
• A foreigner seconded to provide services in the Czech Republic on behalf of his or her employer with a seat in an EU country
• A third-country citizen who is accompanied by his or her close family member (spouse, child or parent) from an EU country
• A dependent of a non-EU national who is working in the Czech Republic based on a residence permit provided that the dependent holds a valid residence permit
• Non-EU nationals on a government list for a work permit waiver; as of 1 July 2024, which are citizens of Australia, Canada, Israel, Japan, Korea (South), New Zealand, Singapore, the United Kingdom and the United States
Nevertheless, the Czech company must register these individuals at the Czech Labour Office, and the individuals are always required to obtain a relevant visa or residence permit.