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Tax & other news:

Changes in tax laws for 2013 – 2015

a) Surcharge of 7% to personal income tax – solidarity tax increase- For taxable period 2013 through to 2015 the positive difference between the sum of tax bases from income from employment activity (§6) and income from entrepreneurial activity (§7) and a 48-multiple of average wage (avg. wage for 2013 is CZK 25 884, therefore the 48-multiple is CZK 1 242 432) will be subject to 7% tax surcharge.

b) Limitation of lump-sum expenses – For the type of income which is subject to 40 % as well as 30 % there will be a cap for maximum lump-sum expense of CZK 800.000, and CZK 600.000 respectively(This means the maximum income to which the lump-sum expenses can be claimed is CZK 2 million). This limitation will not affect those, who apply 60% lump-sum expenses. It will, however, significantly affect those who generate income from "other business activities" (e.g. not requiring trade license), such as advocates.

c) Basic tax relief for active pensioners cancelled – In 2013-2015 the basic tax relief will be cancelled for pensioners with income subject to personal income tax.

d) Increase of withholding tax on income of tax non-residents from 15% to 35% – This measure will affect income of tax residents from so called tax heavens, i.e. countries which have not concluded Double Tax Treaty with the Czech Republic, which usually modifies the withholding tax applicable on income of residents of contracting parties.

e) Increase of VAT rates by 1 point to 15% and 21%

f) Increase rate of real estate transfer tax by 1 point to 4%

g) Cancellation of maximum cap of base for calculation of health insurance contributions – For the taxable periods of 2013 to 2015 the maximum cap for base for calculation of health insurance contributions for OSVC – entrepreneurs will be cancelled.

h) Cancellation of tax exemption from RETT – From 1.1.2015 the tax exemption from real estate transfer tax will no longer be applicable for contribution of real estate into registered capital of companies & co/operatives. The exemption will continue to apply to transfers of assets in course of mergers.

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Latest update: 12 December 2012