If you want to do business in Czech Republic, this article explains the tax laws for a LLC which is the most common company structure in Czech Republic.
CZ imposes corporate tax on a worldwide basis. The usual approximate percentage for income remitted, from our research, and this is not personal tax advice, is 19%. Czech Republic may have exclusions and other available benefits to transfer in foreign earned profits. Taxes are low in Czech Republic because the effective corporate tax rate is 19%. This ranks Czech Republic as 64th overall with regards to CIT globally.
The valued added tax rate in Czech Republic is 21.00%, that ranks Czech Republic as 155th overall with regards to VAT taxation rate internationally. In terms of other taxation, an employer will contribute 34% to the equivalent of a social security fund and an employee will contribute 11%. The overall complexity of the tax system is high. This is measured by average time to comply with a country's labor tax requirements is as it is 217 hours. Contributing to this is the number of yearly labor tax payments, which is 2 in CZ.
Thin cap rules are officially enacted. This refers to any sort of restrictions on companies' debt-to-asset ratios.
Dividends paid by resident entities to other resident entities are subject to a 15% final withholding tax. An exemption may apply if parent company owns at least 10% of shares of the payer in an uninterrupted period of 1 year. Dividends received from foreign entities are subject to a special tax of 15%. However, a participation exemption may apply if recipient holds at least 10% of shares of the subsidiary in an uninterrupted period of 1 year, payer is a legal entity similar to a LLC o Join Stock company resident of EU or other jurisdiction where CZ has concluded a tax treaty with, and profits of subsidiary were taxed at an income tax rate of at least 12%. Dividends are payments of company earnings, voted by the board, to a particular class of shareholders. Dividends can be one of the following cash payments, shares of stock, or other property.
Capital Gains are usually subject to CIT. A participation exemption may apply if they are met the aforementioned conditions. A capital gains tax is levied on the profits that a corporation or natural person realizes when they sell sells a capital asset for a price that is higher than the purchase price.
The interest withholding tax rate is estimated at 15%. Which means that the relevant tax authorities expects companies to pay tax on at least 15% of interests remitted abroad. The dividends withholding tax rate is 15%. This means that the taxman expects LLC's to withhold 15% of dividend payments abroad. The royalties withholding tax rate is 15%. This means that the tax authorities expects relevant legal entities to withhold 15% of payments abroad on royalties. A withholding tax exemption may apply, on dividends paid to EEA and Switzerland if the conditions of the participation exemptions are met, and on interests and royalties under the EU interest/royalties directive. Withholding taxes may be reduced under tax treaties. Payments to residents of tax havens may be subject to an increased rate of 35%.
There is no known tax on wealth in Czech Republic. There are inheritance, transfer and real property taxes in CZ. There are popular and well known R&D intitiatives that provide breaks on taxation in Czech Republic.
The above is not tax or legal advice for your individual facts and circumstances. Incorporations.io can point you to an accountant in Czech Republic who can give you the proper advice and help you need. Click the free consultation button above.
It takes approximately 94 hours to file and prepare documents for a Czech Republic Civil Law.
The corporate tax is approximately 19% which is 66 in the world.
Owners of a company in Czech Republic are not allowed to carry back a loss and may be allowed to carry forward a loss for 5 years.
The vat rate in Czech Republic is 21% which ranks 155 in the world.