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' (which means that social and health insurance paid from salary by the employer was added to the employment income tax base of the employee). From 2021, the 'super-gross income' concept has been cancelled, and the tax base is not calculated from gross income only. Also, the solidarity surcharge of 7% for high-income earners has been abolished as of 2021 and replaced by the progressive rate as mentioned below (previously, income tax called '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 applied).
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, for 2022 is CZK 1,867,728, and for 2023 is CZK 1,935,552) is subject to a 15% rate.
- Gross 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, and except for certain types of foreign income included in the separate tax base (see below).
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 bonds from abroad) as of 2021.
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.