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
For 2020, the PIT rate was 15% calculated from a so-called 'super-gross income'.
As of 2021, the Czech Republic returns to progressive taxation, with the introduction of a marginal rate of 23%, as follows:
- Gross income up to the social security payment cap (the threshold for 2021 is CZK 1,701,168) will be subject to a 15% rate.
- Gross income exceeding CZK 1,701,168 will be subject to a rate of 23%.
As the progressive tax rate will be applicable to all types of income, some passive income, like capital gains or rental income (combined with employment income), may incur a higher tax burden. However, for most individuals with employment income only, this change will lead to effective lower employment taxation.
The solidarity surcharge of 7% for high-income earners was abolished as of 2021. Previously, as of 2013, 'solidarity contribution' amounting to 7% of the gross employment income and self-employment income less tax deductible expenses that were above the social security payment cap was in effect. This additional 'solidarity contribution' applied to income from employment and entrepreneurial activity only.
Separate tax base
A special tax base with a rate of 15% is introduced for selected types of non-Czech investment income (e.g. dividends and interest from abroad) as of 2021.
Individuals will be able to include capital income from abroad in this separate tax base; and they will be subject to a 15% tax rate. However, tax allowances or tax-deductible items will not be applicable to reduce this tax base.
As progressive marginal rates of 23% apply to all types of income, the inclusion of selected foreign capital income in a separate tax base can ensure that they will remain subject only to a 15% tax rate.
Local income taxes
There are no local taxes on income in the Czech Republic.