Czech Republic income tax

The Chamber of Deputies of Czech Republic approved a bill proposing several changes to the Income Taxes Act, Value Added Tax Act and others that will come into force on 1 January 2013. The changes contained in this bill are primarily as follows:

Czech Republic added Personal income tax. With regard to the personal income tax, a “solidarity contribution” is to be introduced. The solidarity contribution of 7% applies only to income from employment and entrepreneurship exceeding 48 times the average salary.

Limits on lump sum expense deductions for personal income tax are introduced. For taxpayers who use the expense lump sum of 40% (for example auditors, attorneys at law, tax advisors) a limitation of the absolute amount of lump sum costs to CZK 800.000 is proposed.

Value Added Tax. As of 1 January 2013, the two VAT rates will be increased by one percentage point to respectively 15% and 21%. This increase will be applied in the period 2013-2015.

The amendment to the VAT Act extends the situations where the customer is liable for payment of VAT on the supply in the event that it is not paid by the supplier to cover, for example, payments for a taxable supply to a supplier’s account that has not been published by the tax administrator, payments to so-called “unreliable payers” and in some other cases.

 

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