2021 Tax Updates in Czech Republic - FCHAIN

In 2021, companies are learning to adapt to new business realities and are making their own adjustments to business development. The Czech government has made some changes to the tax system.

One of the major updates is the abolition of the tax on real estate acquisitions. Although this law was passed in 2021, it applies to all acquisitions from December 1, 2019. Previously, this tax was 4%.

The tax allowance per taxpayer increased from CZK 24,840 to CZK 27,840 since January 2021.

One of the major updates is abolished Super-gross Wage and Solidarity Tax. The super-gross wage and the solidarity tax are abolished and a progressive taxation is introduced at the tax rates of 15 % and 23 %. The increased tax rate is applicable for the amount exceeding the threshold of 48 times the average wage; CZK 1,701,168 for the year 2021.

The amendment to the Income Tax Act introduces special tax depreciation period for assets categorized in the 1st class (1 year instead of 3 years) and 2nd class (2 years instead of 5 years) purchased from 1st January 2020 to 31st December 2021. The amendment also increases the threshold for classification of individual tangible assets in the category of tangible assets from CZK 40K to CZK 80K and abolishes tax regulation of depreciation of intangible assets purchased after the amendment has come into effect; tax depreciation of intangible assets will newly correspond to the accounting depreciation.

As of May 2020, among others the supply of tap water, catering services e-books and as of July 2020 accommodation services are newly subject to 10 % super reduced VAT rate.

Since September 2020, so called “quick fixes” rules are implemented; Harmonized rules on call-off stock arrangements, new substantive conditions with respect to intra-Community supplies of goods (stating VAT ID of the customer, submission of VIES declaration), harmonized rules regarding chain transactions and determining of place of the supply, list of recommended criteria for the documentary evidence required to claim an exemption for intra-Community supplies were implemented. Also, as of September 2020, the exemption applicable on effected export of goods is linked to the fact whether the goods physically left EU, not the export customs regime applied.