Czech Republic

Czech tax residents are generally subject to Czech income tax on their worldwide income. Tax non-residents are generally taxed only on income considered Czech-source income.

Personal income tax rates

The Czech Republic applies progressive taxation on income of tax residents as follows:

• Gross annual income up to CZK 1,676,052 (the bracket is calculated as 36x average monthly salary) is subject to a 15% rate.
• Gross annual income exceeding this threshold is subject to a rate of 23%.

The above rates apply to all types of income, except for income that has already been taxed by the final Czech withholding tax (WHT) at source (such as dividends or interest from bonds distributed by Czech companies) and except for certain types of foreign income included in the separate tax base (see below).

Separate tax base

A special tax base with the rate of 15% applies to selected types of non-Czech investment income (e.g. dividends and interest from bonds from abroad).

Individuals can choose to include capital income from abroad in this separate tax base to which a flat 15% tax rate applies. However, tax allowances or tax-deductible items cannot be applied to reduce this tax base. The individual can thus decide whether to leave the capital income from abroad in the general tax base, which is subject to the progressive 15% and 23% rates but which can be reduced by tax allowances and deductible items, or to include this income in the separate tax base, which is subject to the flat 15% tax rate but cannot be reduced by tax allowances and deductible items.

Local income taxes

There are no local taxes on income in the Czech Republic.