Social security and health insurance contributions
Social security taxes are obligatory for an individual employed by a Czech company. Most foreign secondees working in a Czech company are obligated to pay Czech social security and health insurance unless the European Union (EU) regulation or social security treaty states otherwise. The rules on participation in the Czech social security and health insurance system are complex, and each secondee's situation should be reviewed individually.
Social security contributions provide funding for three separate funds: pensions, unemployment benefits, and sickness (together with other benefits). Entrepreneurs can choose whether to contribute to the sickness fund.
Health insurance covers medical care. An individual can choose the licensed insurance company to which he/she will pay health insurance contributions.
Mandatory contributions are calculated from the individual's gross remuneration. Income that is subject to income tax is generally subject to contributions into the social security and health insurance system.
The contribution rates calculated from the gross salary are:
- the employer: 24.8% for social security and 9% for health insurance;
- the employee: 7.1% for social security and 4.5% for health insurance.
The payments are made by the employer (for both the employee's part deducted from his/her gross salary and the employer's parts paid on top of the gross salary).
The maximum annual cap for the assessment base for calculation of contributions into the social security system is 48 times the average monthly wage per year (i.e. CZK 2,110,416 for 2024). This cap applies to both employees and entrepreneurs.
There is no cap for contribution for the health insurance.
Value-added tax (VAT)
VAT is generally charged at 21% on supplies of goods and services within the Czech Republic.
Certain supplies (e.g. groceries excluding most of drinks, medicaments, drinking tap water, construction works related to social housing, hotel accommodation and admission to cultural, sport, theatre, or similar facilities, catering services, heat and cold) are taxed at a rate of 12% starting January 1, 2024.
There is no VAT on books in printed or electronic form starting January 1, 2024.
Exports are generally exempt from VAT with a credit. Some supplies are exempt without a credit, including the lease of real estate (with certain exceptions), financial and insurance services, education, health, and welfare.
VAT deduction on personal cars is limited to CZK 420,000.
Net wealth/worth taxes
There are no net wealth/worth taxes in the Czech Republic.
Inheritance and gift tax
There is no inheritance tax.
Gifts are not taxed by a special gift tax, but rather they are included in the recipients personal income tax. A tax exemption applies to gifts received from close relatives.
Property tax is paid each year from real estate owned by the taxpayer as at 1 January of the respective year. The amount is based on the type and size of the real estate, the purpose of usage, and the location.
Tax on real estate acquisition tax
There is no real estate acquisition tax, transfer tax or a similar tax.