The taxation plans of the new government

The newly forming government of the Czech Republic has presented a draft of its policy statement. We have selected the most interesting points relating to taxation and insurance for you.

No tax increases

• The government’s policy statement includes a commitment not to increase any taxes.

Corporate income tax

• Reduction in the corporate income tax rate to 19% (from the current 21%).
• Introduction of mandatory transfer pricing documentation for multinational groups.
• Introduction of faster and more efficient tax depreciation for investments (replacing the current subsidies).
• More attractive research and development deduction, including improved legal certainty regarding its eligibility and extension of the period for claiming the deduction.

Personal income tax

• Abolition of the tax exemption limit for leisure benefits provided to employees.
• Restoration of the original form of the spousal tax credit.
• Restoration of the student tax credit.
• Reintroduction of the preschool tax credit, i.e. the tax credit for placing a child in preschool.
• No increase in the social insurance contribution assessment base for self-employed persons (it will remain at 35% of the average wage).

VAT

• Negotiations at EU level to increase the limit for mandatory VAT registration significantly above CZK 2 million.
• Reduction in the VAT refund period for unpaid invoices to three months (from the current six).
• Unification of the VAT rate for catering services and serving non-alcoholic beverages at 12%.
• Introduction of 0% VAT on prescription medicines.

Administration and collection of taxes and insurance 

• Reintroduction of the EET (electronic sales records) system from 2027 (except for small businesses and occasional side earnings).
• Establishment of a unified collection point to consolidate the collection of taxes, social security and health insurance.
• Abolition of the mandatory registration of employees for health and social insurance in relation to agreements to complete a job.

Please don’t hesitate to contact us if you have any specific questions. We are always ready and happy to assist you.   

With friendly regards,

Team WTS Alfery