Czech Republic

For tax periods starting in 2024, the corporate income tax (CIT) rate increases from 19% to 21%.

The Czech generally accepted accounting principles (GAAP) also newly allows to keep statutory accounting books in euros (EUR), United States dollars (USD), or British pounds sterling (GBP) as a functional currency in case it is the currency of the entity's primary economic environment. The functional currency is then used for CIT calculation as well. However, a complex reform of tax law in this respect has not yet been completed, e.g. value-added tax (VAT) legislation still works only on a Czech koruna (CZK) basis as well as employee wages may be denominated only in CZK.

A new option was introduced from 2024 regarding so-called unrealised foreign exchange (FX) differences (i.e. FX arising from revaluation of balance sheet assets and liabilities using the exchange rates as of the last day of the accounting period). Taxpayers may choose to exclude such FX differences from the income tax base.

From 2024, Pillar 2 as incorporated into Czech law will become effective. Pillar 2 legislation should ensure a minimum level of 15% effective taxation for enterprises that are members of large multinational groups with presence in the Czech Republic. The global anti-base-erosion (GLOBE) rules should apply from 2024, with the backstop rule coming into effect from 2025.

Entities that are part of a group with a foreign element will be required to publish a tax report summarising the tax position of the group (public country-by-country [CbC] reporting).

A new VAT rate of 12%, which effectively consolidates the former 10% and 15% rates, was introduced starting 1 January 2024.

Real estate tax rates were almost doubled from 2024, and a statutory inflation coefficient will have to be factored in calculation of tax effectively from 2025. Still, the tax remains relatively immaterial.