www.proshat-int.com

For every entrepreneur who opened his business in the Czech Republic, has issued a residence permit in that State, will be interesting and useful information about the tax laws the Czech Republic. This will correctly build accounting and tax planning. Tax planning helps to use legal methods to reduce tax payments, to apply in practice the country's legislation provided tax incentives, skillful use of territorial differences in taxation. Laws that are the foundation of the Czech tax legislation, were in during 1998 substantially revised. In particular, the rate of income tax of legal persons has changed from 39% to 35% from 1 January 2000 it was 31%, and from 2006 - 24% (in accordance with the tax laws of the united Europe). Increase the threshold for non-taxable income, re-created a section on the VAT refund to foreigners.

In this section we give basic information about taxes on individuals and entities that exist in the Czech Republic today. In connection with the assumption of the CR in the EU, the tax system of the Czech Republic has undergone a currently strong changes in the direction of unification of the tax laws of the united Europe, and this:

• gradual reduction of profit tax of legal entities from 31% to 24% in 2006.
• possibility of writing off losses from previous years and thus the possibility of reducing the taxable profits within the next 5 years.
• increase exemption limit for children from 23 520 CZK to 25 560 kroons per year, etc.

The Czech Republic is a legal democratic state with market economy and tax system to comply with these principles.

We offer you the information on major Czech laws, which must be known to the foreign entrepreneur: Annual company to be delivered by 31 March following the reporting month (for a delay until April 31 - a fine of 5000 crowns and above). Balance can be taken until June 31, provided that it prepares and delivers a tax specialist with a license, but this must be reported to the tax office until 31 March.

Income tax on individuals charged with the following income:

• income from wage labor and official content
• income from business or other independent gainful activity
• income from capital
• Income from lease
• other income

From 1 January 2004, a new scale of rates of income tax contained in the following table:

Income tax on legal persons charged with the income generated from sources in the CR and from sources abroad. On the other hand, the payers, not a lot of time staying on the territory of the Czech Republic, are obliged to pay tax only on income earned in its territory.

The subject of tax revenues are from all the activities and disposition of all property, if the law is no other direct references. The tax rate on income of legal persons is 24%. For investment, mutual and pension fund tax rate is equal to 2004, 15% of the tax base, reduced to the articles mentioned in the law.

In all cases, the annual balance sheet does not include the costs: the penalty, fines, capital stock company, a loss greater than the money received for the insurance, the cost of the presentation. Taxable income can reduce the cost of gifts of up to 2000 kroons (in schools, hospitals, etc.), but not more than 5% of the base of taxable income.

Value Added Tax

Value added tax is a major component of the tax system. The rate of VAT varies depending on the type of activity - trade or services. Main, the tariff is 19% lower rate - 5%. Reduced tariffs are applied in calculation of VAT on income from services trade in food, medicine. VAT is paid monthly with an annual turnover of 10,000,000 kroons and once a quarter with turnover of less than 10,000,000 crowns a year.

VAT was introduced in the Czech Republic since January 1, 1993 (№ 88/1992 Laws and subsequent amendments thereto). Imposing this tax is subject to the activities inside the country, imported goods and non-scheduled international bus passengers, carried out by a foreign transport company in the Czech Republic.

Mandatory payers are persons residing in the CR, for whom the activity is undertaken, and the importation of goods - those which should be skipped products. In the case of non-regular bus transport within the country, foreign tax paid by the transport organization. Taxes are levied, both natural and legal persons. If the law does not expressly stated otherwise, the pay value added tax obligation of all persons falling under this law, whose circulation is within 12 calendar months exceeded 2 000 000 CZK.

The subject of taxation are all legal activities undertaken for value and without compensation. When importing goods for taxation of the actual situation of customs regulations, if the law is no other reservations. Obligation to pay tax on importation of goods arises from the date of customs duty.

If these goods are exempted from payment of duties, they are exempt and the VAT. The export of goods abroad, carried out by the payer, tax-exempt. The basic rate of VAT -19%. The products described in the special lists are subject to tax at a rate of 5% (eg, energy, certain types of food, mineral oils, and some services). The Act also contains a list of articles (of goods and services) to which value added tax is not applicable (postage. Medical care, transfer and leasing of land, the cost per rental, etc.).

Road tax

If you have registered at the company motor company pays an annual road tax (depending on the type of vehicle and engine capacity) - from 1200 CZK to 4200 CZK (800-3000 cubic meters. Cm).

Property Tax

The subject of the tax on land is land in the Czech Republic. The taxpayer is the owner of the land. Tax is calculated and paid once a year. CR Act № 338/1992 Sb. "On Property Tax" (supplemented and amended laws № № 315/1993 Sb., 242/1994 Sb. And 248/1993 Sb.) Defined by the real estate tax, which includes:

• Tax plots (land)
• Tax on buildings

The tax rate for each square meter of the following:

• On the land registered as arable land, hops, vineyards, orchards and gardens - 0,75% of the taxable amount, calculated as a multiple of the value of land sq.m. and the official price of one square meter of land (as determined by the central authorities of the Czech Republic, depending on the quality of land).
• On land, registered as meadows, pastures, forests, ponds - 0,25% of the tax amount calculated as a multiple of the value of land sq.m. and the official price of one square meter of land.
• On land, registered as built-up areas or the palace area - 0,10 Crown / sq.m.
• On the land intended for construction, but still vacant 1 crwon per sqm.

When calculating the value of the basic tax rate of the deposit multiplied by a factor depending on the size of settlement and population. The highest rate in Prague - 4,5.

Tax on buildings and structures

The subject of tax are buildings and structures on the territory of the CR. The taxpayer is the owner of buildings and structures. Tax is calculated and paid once a year.

The tax rate is as follows:

• For residential (apartment) buildings - 1 krone per square. m. built-up area
• At the chalet buildings and individual houses (villas, houses) - 3 crowns per sq. built-up area
• On detached garage - 4 crowns per sq. m. built-up area
• Buildings and structures used in business purposes:

1. for primary agricultural production, forestry and water management - 1 krone sq.m. built-up area;
2. for industrial production, construction, transport, energy, and the rest of agricultural production - 5 kroons per square meter built-up area;
3. For the rest of the - 10 crowns per square meter built-up area.

The basic rate per 1 sq.m. increases in high-rise buildings for every additional floors above ground more than 1 second at 0.75.

Tax on sale of real estate

Taxpayer is selling real estate. The tax rate is 3% of the taxable amount (ie, the price of selling real estate). In that case, if it is very low, the value of property is determined by a court expert. Tax information submitted to the tax authority until 30 days after registration of the transaction and tax is payable until 30 days after receipt of payment notice.

Preferential taxation

The Czech government approved a package of measures to attract investment in the Czech economy. Benefits include:

1. five-year deferral of taxes on corporations and the subsequent tax rebate in the amount of five-year tax;
2. exemption from payment of customs duties on imported equipment and 90-day grace period for payment of value added tax;
3. establishment of special customs zones for industrial facilities;
4. subsidies - in the form of interest-free loans - to cover 50% of the cost of training personnel from among Czech citizens;
5. providing subsidies to companies to create jobs in underdeveloped regions;
6. sale of land for a symbolic price in specially designated areas.

However, the package provides too high a threshold for these benefits - investments must be of at least 850 million kroner (34 million euros), which virtually eliminates the Czech investors. In addition, it wants to invest in the production of high-tech products, while the Czech companies in need of funds for the reorganization. According to the government "ChehInvest, at least nine potential investors from the United States, Japan and Germany were waiting for the decision to invest capital in the production of electronics, precision engineering and automotive.

Agreement on avoidance of double taxation

Czech Republic signed a treaty to avoid double taxation with Albania, Austria, Egypt, Estonia, Finland, Hungary, Indonesia, Ireland, Korea, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Russia, Slovak Republic, Switzerland, Thailand, United Arab Emirates and the United States. Also, the treaties on the avoidance of double taxation signed with Belarus, Malaysia, South Africa and Venezuela.