Czech Republic's current tax system was put into administration on 1 January 1993.
Changes to tax laws are quite frequent and common in the Czech Republic due to a dynamic economy.
[1] Compared to the averages of the OECD countries, revenues generated from taxes on social security contributions, corporate income and gains and value added taxes account for higher proportions of total taxation revenue.
Personal income tax lies on the other end of the spectrum where the revenue is proportionally much lower than the OECD average.
This rate is applied to all goods and services which are not listed on a special roster for reduced taxes.
Examples of goods taxed by 15% are grocery and non-alcoholic beverages, plants and animals, music notes, books and some drugs.
[12]VAT rates (2024)[13]Objects of the excise tax in the Czech Republic are engine oils, alcoholic beverages as wine and beer and other distillates and tobacco products.
[14] The difference between excise tax and VAT is that VAT is imposed on every good while excise tax is imposed just on goods that are harmful for our health, morally hazardous or are harmful or costly for society.
[15] From excise tax are exempted tobacco products destined for test of quality and samples taken by customs office.
The reason for the introduction of excise tax is to regulate the prices of certain commodities in an attempt to increase state budget revenues or to reduce the quantity of goods sold, the consumption of which is harmful to health.
[18] Objects of the ecotax are natural gas, black and brown coal, coke and other hydrocarbons peat and electricity.
One example of ecotax is registration fee for vehicles complying with lower European emission standards.
Energy Tax is another ecotax and it is imposed on natural gas and other gases, electricity and solid fuels.
The tax is levied to the sellers of energy or the operators of distribution or transmission systems.
[23] Every corporate taxpayer can choose between straight-lined and accelerated depreciation of tangible assets.
A progressive tax was introduced at the end of 2020 to replace the solidarity surcharge that had been in place since 2013.
The progressive tax of 23% applies to personal income above the statutory limit, which has been set at 36 times the average monthly salary in 2024.
[24] Own-account workers can apply a so-called lump sum tax, i.e. the amount of the levy is not calculated directly on their income.
Real Estate Tax is paid annually, usually levied to the owner and in special instances to the lessee.
The gain made on the sale of the property compared to its purchase price is then taxed.
The tax rates are based on the scheme where there are illustrated groups of kinship and on the size of property.
The rules for exempting this income from taxation are similar to the original gift tax.
First group is formed by the closest relatives—husband or wife, kids, grandchildren, parents and grandparents.
Second group is formed by side-lined relatives (siblings, aunts and uncles, nieces and nephews and persons living together in household for more than one year.
Exceptions are so-called ecological cars (electric, gas,...) and some are totally exempted from the fee.
Electric, hybrid or hydrogen-based vehicles fully exempted from paying this fee.
"[37] AFD is responsible for performing the role of an administrative body and methodical management of the tax authorities.
The tax system in the Czech lands during Middle Ages developed similarly as in other European countries.
They had to pay an annual fee which was almost twice as high as the tax for the rest of the population for using land and protection from the king.
[40] During the Austrian Empire in the 18th and 19th centuries, the Bohemian Kingdom (what is now the Czech Republic) carried a significant part of the tax burden, as one of the most industrialized parts of the empire, paying 32% of all taxes in the Austrian territories in 1750.