National law – CZ – Civil and public law – chapter 5

The tax system of the Czech Republic is similar in its main features to the systems of most advanced countries, especially European ones. Tax revenues come roughly equally from indirect and direct taxes.

Direct taxes include: personal income tax, corporation tax, real estate tax, road tax, property tax.

Indirect taxes include: value added tax, excise duty.

The statutory deadlines for tax compliance differ not only according to the type of tax but also according to the range of goods or type of business concerned. Tax payers who, according to Act. No 353/2003 Coll. on excise duties, as amended, the obligation to pay the tax arises, they are obliged to file a tax return separately for each tax to the customs office within the 25th day after the end of the taxable period in which this obligation was created unless the Act on excise duties provides otherwise.

When importing selected products, a tax declaration is considered to be a customs declaration proposing the release of selected products into the relevant customs procedure.
Pursuant to the specific provisions of the Excise Duties Act, legal and natural persons who have the status of taxpayers have the right to ask for tax refund if they have purchased or have themselves manufactured and demonstrably used, for example, mineral oils for heat production and selected mineral oils for agricultural primary production and forest management, which have been purchased or produced by other (technical) gasoline and proven to be used for purposes other than for sale, for propulsion of engines, for the production of heat or for the production of mixtures.

Value added tax

The subject of the tax is:

  • the supply of goods for consideration by a taxable person in the course of an economic activity with a place of performance within the country,
  • provision of services for consideration by a taxable person in the course of an economic activity with a place of performance in the Czech Republic,
  • Acquisition of goods from another Member State of the European Union for consideration effected within the country by a taxable person in the course of an economic activity or a non-taxable legal person (not established or set up for business purposes) or acquisition of a new means of transport from another Member State the State for consideration by a person who is not a taxable person,
  • Import of goods with place of performance in the Czech Republic

    A taxable person is a natural or legal person who independently carries out economic activities, unless the law provides otherwise. A taxable person is also a legal person who was not established or established for the purpose of doing business when carrying out economic activities. The state, regions, municipalities, organizational units of the state, regions and municipalities, voluntary unions of municipalities, the capital city of Prague and its city districts, and legal persons established or established by special legal regulation or pursuant to a special legal regulation are not considered to be in the exercise of powers in the field of public administration taxable persons, even when they charge a fee for the exercise of those powers.

The taxpayer becomes a taxable person established in the Czech Republic whose turnover for a maximum of 12 immediately preceding consecutive calendar months exceeds CZK 1 000 000, with the exception of a person who only carries out exempt transactions with no tax deduction. The taxable person is a payer from the first day of the second month following the month in which he exceeded the turnover determined if he has not been paid by the payer in advance.

Under the Value Added Tax (VAT) VAT Transfer Scheme, it will be extended by July to provide workers for construction or assembly work, to deliver goods as a guarantee, to deliver real estate sold by the debtor from a court decision or to arrange delivery of investment gold. It is considering an amendment to the VAT Act with the expected effect from July, as reported by the Financial Administration.

The transferred tax liability is based on the principle that, in the case of the provision of services or goods, VAT is not recognized by the seller but by the customer. The vendor will issue a tax document where it will not show the amount of VAT against the current tax document. Instead, it states that the amount of the tax is to be added and awarded to the customer. The aim is to avoid fraud and speculation in connection with VAT. However, the measure does not concern end-user small consumers, but it is a measure at the level of VAT payers, i.e. companies and entrepreneurs.

Foreigners who work in the territory of the Czech Republic have the same tax rights and obligations as citizens of the Czech Republic. If the foreigner is a tax resident (tax payer) of the Czech Republic, then it means that he has unlimited tax liability in the Czech Republic. The Czech Republic’s tax residents are those foreigners who reside or usually stay in the Czech Republic for more than 183 days during the tax year. On the contrary, a non-resident foreigner does not usually reside in the Czech Republic and usually stays here only temporarily, for example for the purpose of healing or study, etc., and has a permanent residence in another state.

A foreigner who is a taxpayer of the Czech Republic has a general obligation to include in his tax return not only income from sources in the Czech Republic but also his income from abroad. Revenue from abroad means revenue that flows from abroad and is taxed abroad. In order to avoid double taxation of the same income, of the same property, both in the State of the source and in the State of the recipient, and, where appropriate, that some income does not remain unpaid, there are double taxation treaties between States.

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