Czech Republic

Corporate income tax (CIT) applies to the profits generated by all companies, including branches of foreign companies. Corporate partners in general partnerships (i.e. unlimited) and corporate general partners (i.e. unlimited) in a limited partnership are subject to CIT on their share of the profits in the partnership.

Czech resident companies are required to pay CIT on income derived from worldwide sources. Non-resident companies are required to pay CIT on income sourced in the Czech Republic.

The CIT rate is 21% for tax periods starting in 2024 (19% for the previous tax periods) and applies to all business profits, including capital gains from the sale of shares (if not exempt under the participation exemption regime)

In 2023 through 2025, a ’windfall tax‘ (60% CIT surcharge) applies to excess profits of large banks and companies within the energy sector. The excess profits are calculated on the basis of the average CIT base declared by the company in years 2018 through 2021, and this average CIT base is then increased by 20%. The part of the annual CIT base generated by the company in years 2023 through 2025 that exceeds this increased average CIT base for years 2018 through 2021 is subject not only to the standard CIT of 19% (21% in 2024 and 2025) but also to the additional CIT surcharge of 60% (therefore, the total CIT applying to these excessive profits is 79% [81% in 2024 and 2025]).

There is a special CIT rate of 15% levied on dividend income of Czech tax resident entities received from non-resident entities (unless subject to participation exemption).

A 5% CIT rate applies to income of certain investment funds, and a 0% CIT rate applies to pension funds.

Pillar 2 minimum tax

Czech law implemented the GloBE rules, i.e. the Income Inclusion Rule (effective from 31 December 2023) and the Undertaxed Payments Rule (effective from 31 December 2024). Also, the Domestic Minimum Top-up Tax of 15% was introduced (from 31 December 2023), together with Transitional CbCR, UTPR Safe Harbours, and QDMTT Safe Harbour.

The Pillar 2 rules apply to multinational groups with presence in the Czech Republic. The groups are in scope if the revenue in their Consolidated Financial Statements as prepared in accordance with an acceptable Financial Accounting Standard of the ultimate parent entity (UPE) exceeds EUR 750 million based on at least two of the four fiscal years immediately preceding the fiscal year.

Local income taxes

There are no regional or local income taxes in the Czech Republic.