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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The Amendment to Law on Accountancy allows taxpayers to keep accounts in another fiscal period than the calendar year. The fiscal tax year must have 12 consecutive months.
Accounting Standards
The Czech accounting system is based on double-entry bookkeeping and is largely consistent with the systems of other European countries with certain minor difference regarding, for example, financial leasing or depreciation of fixed assets. Czech accounting rules are determined by the Ministry of Finance. They come from the National Accounting Standards. Czech Republic tries to get accounting rules in accordance with IAS, IFRS.
Accounting Regulation Bodies
Ministry of Finance of the Czech Republic
Accounting Reports
Companies have to establish a balance sheet, a profit and loss account and annexs. Those accounts must be published in Czech, in CZK. More, companies obliged to have an audit must prepare the statement of cash flows and the statement of changes in equity. Corporations limited and societies listed on Stock Exchange have to publish the management report.
Publication Requirements
The balance sheet and the profit and loss account must be prepared in accordance with the model which is on your disposal in the annexe of the Act. on Accounting.

Tax payers must file tax returns within three months following the end of the tax period. Czech legal entities that are required to prepare audited financial statements must file their tax returns within six months following the end of the taxable period.

Professional Accountancy Bodies
Union of Accountants
Chamber of Certified Accountants
Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. For more information, you can contact the Chamber of Auditors of the Czech Republic.
Accounting News
Union of Accountants
Ministry of Interior, coll. of codes

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Tax Rates

Consumption Taxes

Nature of the Tax
Value added tax (VAT)
Tax Rate
21%
Reduced Tax Rate
15% of VAT on food, books, special healthcare products.
A new 10% reduced VAT rate will be applied from 1 January 2015 on: medicines, pharmaceuticals, e-books and baby foodstuffs.
Other Consumption Taxes
Excise taxes are also perceived (on tobaccos, oil productions, beer, wines and liqueurs), applied according to the type and the quantities of products. They are payable under 10 days after announcement of Customs. Energy tax on supplies of electricity, natural and other gases, and solid fuels are effective since January 2008.
More detailed information on excise duties on the European Commission website.

Learn more about Service Providers in the Czech Republic on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
19%
Tax Rate For Foreign Companies
All Czech tax residents are subject to these taxes on their worldwide income and capital gains, while Czech tax nonresidents are taxed only on their income from Czech sources.
The tax residency of a legal entity is its seat or place of effective management in the Czech Republic.
Capital Gains Taxation
Capital gains are taxed at the normal corporate income tax rate.
Main Allowable Deductions and Tax Credits
Tax deductible costs are similar to that in other countries (if incurred in order to generate, assure and maintain the taxable income): tax depreciation on assets, purchased material and services, wages, salaries and social security and health contributions.

Tax deductible items: charitable donations, research and development costs allowance, accumulated tax losses carried forward from previous year, tax relief. For any additional information.

Other Corporate Taxes
Withholding taxes, value added tax, real property tax and real estate tax, tax on operators of photovoltaic power plants. For any additional information access the PKF Tax Guide on the Czech Republic.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Czech Republic Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 8.0 28.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 413.0 260.0 175.0 207.0
Total Share of Taxes (% of Profit) 49.2 40.5 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Personal Income Tax 15%
Income over 48 times the annual average salary 22%
Allowable Deductions and Tax Credits
Employee's contribution to an old-age pension, a taxpayer's annual exemption, exemptions for non-working wife, disability allowance, high school / university students, etc. Tax deductions are granted for mortgage interest in Czech Republic, life and supplementary pension insurance, and gifts. Personal allowances are available for the taxpayer, her/his spouse and children.
Special Expatriate Tax Regime
Taxable income includes earnings from dependent activities including benefits in-kind (e.g. housing allowances, use of a company car for private purposes, etc.), income from business activities, and income from capital, leasing and other sources.
For detailed information, consult the Taxation Guide provided by Czechinvest.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of Treaties on Income and on Capital
Withholding Taxes
Dividends: 0/15%, Interest: 0/15%, Royalties: 15%

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Sources of Fiscal Information

Tax Authorities
Czech Tax Administration
Other Domestic Resources
Czech Invest - report of the Czech tax system
Information on the local tax system

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Learn more about Taxes and Accounting in the Czech Republic on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The body responsible for the protection of intellectual property is Ùrad Prùmyslového Vlastnictvi (Industrial Property Office). You can also consult the Copyright Law Department
Regional Organizations
For the protection of patents: The European Patent Office.
T o register Community Trade Marks and Community Designs: The Office for Harmonization in the Internal Market.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Act. o 527/1990 on Inventions and Rationalization Proposals
maximum of 20 years Patent Cooperation Treaty (PCT)
Trademark
 
Act. No 441/2003 on Trademark
10 years Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Act. No 207/2000 coll. on Protection on Industrial Design
maximum of 25 years  
Copyright
 
Law No. 121/2000 Coll. on Copyright, Rights Related to Copyright and on the Amendment of Certain Laws (Copyright Act)
Financial rights run for the life of the author and for 70 years after his death. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Act No. 478/1992 Coll. on Utility Models
4 years  

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Legal Framework

Independence of Justice
Yes
Equal Treatment of Nationals and Foreigners
Yes
The Language of Justice
Czech
Recourse to an Interpreter
Possible
Sources of the Law and Legal Similarities

Czech Republic being a member of the European Union, the national law in the country needs to comply with the conditions of the Community legislation. Czech Republic has not accepted compulsory ICJ jurisdiction.

    • Principle source of the law is a Constitution of the Czech republic with the Charter of Fundamental Rights and Basic Freedoms which is based on civil law system originating from Austro-Hungarian codes.
    • All international agreements adopted by Czech parliament take priority over national legislation.
    • Written Codes
    • Findings of the Constitutional Court
    • Precedents
Checking National Laws Online
Czech law in English
Czech codes on-line, Businesscenter.cz (in Czech)

Learn more about Lawyers and Legal in the Czech Republic on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
Czech office for Standard, Metrology and Testing
Czech Office for Standards, Metrology and Testing (UNMZ)
Integration in the International Standards Network
The Czech Republic has harmonized its standards with European norms. Czech Republic is a member of:
- ISO  - International Standard Organisation
- IEC – International Electrotechnical Commission
- ITU – International Telecommunication Union
- CEN  - European Committee for Standardization
- CENELEC - European Committee for Electrotechnical Standardization
- ETSI – European Telecommunications Standards Institute
Classification of Standards
Original Czech standards (10% of the overall annual production of technical standards), which can only be use in areas where European or international standards do not exist, are designated by : CSN + 2 numbers of the class + 2 numbers showing the rank under the class + 2 numbers showing only the sort order (CSN 73 4301)

European or international standards (90% of overall annual development of technical standards) are designated like that CSN EN 115, CSN ISO 1735 , CSN EN ISO 9001, CSN IEC 61713, CSN ETS 300 976
 
For more info see website of CNI.

Online Consultation of Standards
Czech Standards Institute
Certification Organizations
Czech and Slovak Testing Board
Institute for Testing and Certification (in Czech).
Czech Institute for Accreditation

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Business Practices

General Information
Doing business in CR
Czech culture, customs and etiquettes
Czech business culture
Guide to Czech Republic
Guide to Czech Republic
Opening Hours and Days
A typical Czech working day is 8:00 am to 4:30 pm, with a break for lunch. Closing days are Saturday and Sunday.
 

Public Holidays

New Year's Day January 1
Easter Monday Varies
Labor Day May 1
Liberation Day May 8
Cyril & Methodius Day July 5
Jan Hus Day July 6
Statehood Day September 28
Czech Founding Day October 28
Struggle for Freedom Day November 17
Christmas Eve December 24
Christmas Day December 25
St. Stephen's Day December 26
 
 

Periods When Companies Usually Close

No general closing periods People prefer to take their holidays during school holidays to stay with their children : in the summer (July-August), one or two weeks during Christmas, one week in February or March during the spring holiday (he date is not fixed and depends on regions and change every year). But in most cases the office stays open.
 

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Last Updates: October 2014