Social security and health insurance contributions
Social security taxes are obligatory for an individual employed by a Czech company. Most 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 company to which one will pay health insurance contributions.
Mandatory contributions are calculated from the individual's gross remuneration, including most of one’s benefits and allowances. Income that is subject to income tax is generally subject to contributions into the social security and health insurance system.
The contribution rates for the employer are 24.8% for social security and 9% for health insurance. The contribution rates for the employee are 6.5% for social security and 4.5% for health insurance. The payments are made by the employer (for both employee and employer parts of contributions).
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 1,701,168 for 2021, CZK 1,867,728 for 2022, and CZK 1,935,552 for 2023). This cap applies to both employees and entrepreneurs.
As of 2013, there is only a cap for social security contributions. The limit for the payment of insurance premiums for public health insurance was cancelled.
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, construction works related to social housing) are taxed at a rate of 15%, and a second reduced rate of 10% is applicable for specified categories of goods (some medicaments, books, newspapers, and supply of heat and cold).
From 1 May 2020, the second reduced VAT rate of 10% is also applicable for drinking tap water, catering services, soft drinks and draft beer, shoe and clothing repairs, hairdresser services, e-books, etc.
Further, as of 1 July 2020, the second reduced VAT rate of 10% applies to hotel accommodation and admission to cultural, sport, theatre, or similar facilities.
Net wealth/worth taxes
There are no net wealth/worth taxes in the Czech Republic.
Inheritance and gift tax
As of 2014, the inheritance and gift taxes are no longer regulated in separate acts. The taxation is incorporated under the income tax and is subject to progressive taxation as other types of personal income (which means a significant increase of gift tax in comparison to previous legislation). Various exemptions from taxation are, however, possible (e.g. full exemption from inheritance tax for individuals).
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 (previously real estate transfer tax)
In 2020, tax on real estate acquisition was abolished with retroactive effect for real estate registered in the cadastre as of December 2019 onwards.
Prior to this, the tax rate of 4% on the real estate value (purchase price agreed/determined based on expert valuation or value assessed by the tax authorities) applied. The taxpayer was the acquirer.