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Czech Republic: Taxes and Costs

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Rental income tax can be high

INDIVIDUAL TAXATION

Non-residents are liable to tax only on their income from Czech sources. Spouses with at least one child may opt to be taxed jointly under certain conditions. Non-residents are allowed to avail of tax credits, provided that they earn 90% of their income from Czech sources.

INCOME TAX

Taxable income is generally an aggregate of all kinds of income, less the allowable expenses. Income is taxed at a flat rate of 15% for 2008.

RENTAL INCOME
Rental income from a non-business property jointly owned by a married couple shall be taxed as income of only one of them. Taxable rental income can be computed in two ways:

• Income less actual expenses and deductions;
• Standard deduction of 30% of gross rent in lieu of itemized deduction of actual expenses.

CAPITAL GAINS
Gains on the sale of property in the Czech Republic are generally included in the computation for the aggregate taxable income and taxed at the standard income tax rate of 15%. Capital gains are generally computed as selling price less acquisition costs. Gains on the sale of non-business property are exempt from tax if the owner has held the property for at least 5 years.

CORPORATE TAXATION

INCOME TAX

Income and capital gains earned by companies in the Czech Republic is taxed at a rate of 21% for 2008. The taxable income of a corporation is generally computed as gross income less income-generating expenses.

Capital gains from the sale of properties that have been in the company’s possession for at least 5 years are exempt from tax.

PROPERTY TAX

Real Estate Tax

Non-residents are liable to pay real estate tax for properties owned in the Czech Republic. The tax applicable to residential structures used for business purposes is CZK1 (€0.037) per square metre, plus CZK0.75 (€0.028) per square metre above the ground floor, multiplied by a coefficient varying from 1.0 to 5.0 depending on which municipality the property is located.

Czech Republic - more data and information

• Guide to buying houses and registering property sales in the Czech Republic

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