The main taxes in the Czech Republic are personal income tax, corporate tax and value added tax. Energy taxes were introduced in 2008.
Companies with a residence in the Czech Republic are considered the Czech tax residents and their worldwide incomes subject to Czech corporate tax. For permanent establishments and branches of foreign companies are in the Czech Republic taxed only incomes derived from sources in the Czech Republic.
Permanent establishments of foreign companies
A permanent establishment is deemed a place of business of taxpayers in the Czech Republic, eg. Office, workshop, retail space, a place for the extraction of natural resources. "Fictitious" permanent establishment arises when employees of foreign companies perform in the Czech Republic business, management and development activities or provide consulting services for a period exceeding 6 months in any period of 12 consecutives calendar months. The same applies in the case of the construction site. The presence of the person authorized to enter into contracts on behalf of a foreign entity in the Czech Republic can also set up a permanent establishment. Provisions of the agreement on avoidance of double taxation may modify regulations for permanent establishment.
The tax base and tax rate
The tax base is generally the difference between income (revenues) and expenditures (costs) adjusted in accordance with tax laws. To determine the tax base should be followed substantive and temporal connection. The tax rate on corporate income is 19%. Special tax rate of 5% applies to the underlying investment funds. For pension funds, the tax rate is zero.
The tax period is the calendar year, if the taxpayer does not choose a different economic year. Marketing year must take 12 consecutive calendar months and the change must be notified in written form prior to the responsible tax office.
Deadlines for filing tax returns
Tax returns must be filed within three months after the end of the period for which the tax return must be filed (ie. Before 1th of April in the calendar year). Taxpayers who are represented by tax advisor or subject to statutory audit, have a period of three months longer. The period can be extended up to 10 months if the tax return includes taxable income from abroad. In some special cases the period is shorter, usually one month.
Tax liability is due on the same day when finish the date for filing tax returns. Advance tax payments are required to be paid by all taxpayers except those whose last known tax duty did not exceed CZK 30 000. Taxpayers pay advances monthly or quarterly, depending on the amount of the final tax liability.