On 1 January significant tax changes came into effect in the Czech Republic. The 2021 tax package for the Czech Republic includes a respective collection of amendments and was published in the Collection of Czech Laws on 31 December 2020. Some provisions may already be applied to the year 2020.
New tax rates instead of super-gross wage and solidary tax increase
One of the most important elements of the 2021 tax package for the Czech Republic is that the super-gross wage and 7% solidary tax increase have been cancelled. At the same time
- a 15% tax rate to incomes of up to 48 times the average wage (meaning about CZK 140,000 – roughly EUR 5,360 – per month) and
- a 23% tax rate to incomes which exceed this limit
have been introduced.
Increase of the basic discount per taxpayer
Another significant element of the 2021 tax package for the Czech Republic is the increase of basic discount per taxpayer by CZK 3,000 (roughly EUR 115) for 2021. The amount is now CZK 27,840 (roughly EUR 1,067). For 2022 it shall be CZK 30,840 (roughly EUR 1,182).
Monetary contribution to meals
From 2021, employers can contribute a financial contribution to meals which is not subject to tax or insurance levies. The option of providing meal tickets and corporate dining still remains. The limit of the financial contribution and meal ticket is the same – for 2021 maximally CZK 75.60 (roughly EUR 2.90) per one shift.
Write-offs of tangible assets and intangible assets
The existing limit for the recognition of tangible assets has been doubled to CZK 80,000 (roughly EUR 3000). The increase of the limit also applies to the technical appreciation of assets and to asset items and technical appreciation purchase, respectively completed in the course of 2020.
The 2021 tax package for the Czech Republic presents extraordinary write-offs of assets recognised in the first and second depreciation groups. Tangible assets in the first depreciation group (e.g. computer equipment) can be written off in 12 months (instead of the standard three years). In the case of the second depreciation group (automobiles, machinery), assets can be written off in 24 months (instead of five years), with up to 60% of the input price over the first 12 months. The use of extraordinary write-offs is voluntary and applies to assets purchased between 1 January 2020 and 31 December 2021.
The provisions on tax write-offs of intangible assets have been cancelled. Accounting write-offs of intangible assets shall constitute the tax expense. The new legislation may be applied to intangible assets purchased form 1 January 2020.
Reporting exempted incomes from abroad
According to the provisions of the 2021 tax package for the Czech Republic, it is sufficient to report incomes once per year, by 31 January of the following year. It will be necessary to report only incomes which exceed CZK 300,000 (roughly EUR 11,500) per month – instead of the current limit of CZK 100,000 (roughly EUR 3,800).
Amendment to the tax code and introduction of flat tax
Beside the 2021 tax package for the Czech Republic on 1 January 2021 also an important amendment to the Czech tax code came into effect and a flat tax for entrepreneurs has been introduced. About the most important elements of the amendment to the tax code – such as the support of digitalisation, the simplification of inspection procedures, the revision of the sanctioning system and the refund of the tax deduction – you can read in details in the latest article of WTS Alfery by clicking here. About the flat tax you can read here.
Should you have any questions or require any further assistance regarding the 2021 tax package for the Czech Republic or other taxation issues in the country, please feel free to contact WTS Alfery, the exclusive representative of WTS Global for the Czech Republic.