Self-employment income

Income from Czech sources

Any other income from Czech sources not stated above is taxable in the Czech Republic. The tax base is generally equal to the difference between income and tax-deductible expenses (in real amount or determined by lump sum in amount of 30%, 40%, 60% and 80% of received income).

Income from non-Czech sources

Income of Czech tax residents arising from the self-employment activities or any other income not stated above is taxable in the Czech Republic.

However, under the respective Double tax treaty, such income from foreign sources may also be taxed abroad. According to the relevant Double tax treaty, the tax paid abroad may be credited against the relating Czech tax or the income may be exempted with progression from the overall Czech tax base.

Capital gains

Gains of Czech tax residents arising from the sale of shares are generally taxable in the Czech Republic. This should be confirmed on a case by case basis in accordance with the relevant Double tax treaty as well as other type of capital income.

Rental income

Rented property is situated in the Czech Republic

Rental income from immovable property located in the Czech Republic is taxable in the Czech Republic. The tax base is equal to income less tax-deductible costs.

Rented property is situated abroad

Rental income received by Czech tax residents from immovable property situated outside of the Czech Republic is taxable in the Czech Republic. The tax base is equal to income less tax-deductible costs.

However, under the respective Double tax treaty, income from immovable property located abroad may also be taxed in the country where the property is situated. According to the relevant double tax treaty, the tax paid abroad may be credited against the relating Czech tax or the rental income may be exempted with progression from the overall Czech tax base.

Rental loss may be applied against non-employment income received in the same tax period or against rental or other non-employment income in the following 5 tax periods.

Dividend income

Dividends paid by a Czech entity

Dividends received from a Czech entity are normally taxed 15% flat tax rate at source at the time of payment and are not subject to any further tax.

Dividends paid by a foreign entity

Foreign dividend income received by Czech tax residents is subject to a flat 15% tax rate in the Czech Republic.

According to the relevant Double tax treaty, the tax paid abroad may be credited against the Czech tax up to the limits stipulated by the Double tax treaty. This should be determined on a case by case basis in accordance with the relevant Double tax treaty.

Foreign dividend income received by Czech tax non-residents is not taxable in the Czech Republic.

Interest income

Interest income received from Czech banks/financial institutions

Interest received from current accounts or deposits from Czech bank or financial institutions is normally taxed at source of 15% flat tax rate by the bank or financial institution at the time of payment and is not subject to further tax. Czech tax non-residents can apply at the Czech bank or financial institution for non-withholding of this tax upon proving their foreign tax residency status.

Interest income received from abroad

Foreign interest income received by Czech tax residents is subject to a flat 15% tax rate in the Czech Republic. Such foreign interest is usually taxable only in the Czech Republic, i.e. foreign tax (if any) withheld from interest income abroad cannot be credited against the Czech tax. However, this should be determined on a case by case basis in accordance with the relevant Double tax treaty.

Foreign interest income received by Czech tax non-residents is not taxable in the Czech Republic.

Employment income

The tax liability is computed from the tax base (so called “super gross employment income”), which is determined as gross employment income of the individual increased by the employer’s part of the Czech social security and health insurance (“SSHI”) contributions. The employer SSHI contributions amount to 34% of the employee’s gross income up to the maximum annual income subject to the Czech SS contributions is CZK 1,355,136 for 2017.