The personal income tax rate is a flat 15%. For employed individuals, the tax base includes not only the individual’s income but also the employer’s contributions to social security and health insurance; as a result, the effective tax rate exceeds 15%. All Czech tax residents are subject to taxation on their worldwide income by the Czech government, whereas non-residents are taxed only on income sourced in the Czech Republic. An individual is considered a Czech tax resident if they have a permanent residence in the Czech Republic, or if they reside in the country for 183 days or more in any calendar year. Generally, income paid by a foreign employer to an individual for business activities conducted in the Czech Republic is exempt from personal income tax—provided such activities do not exceed 183 days within any consecutive 12-month period. However, this exemption does not apply if the income arises from business activities carried out in the Czech Republic. Taxation rules for individuals moving abroad: Taxable income includes earnings from independent business activities—including non-cash benefits (e.g., use of a company car for private purposes, housing allowances, etc.), income from business activities, and income from capital, rentals, or other sources. In summary, all income—whether monetary or not—is taxable. Generally, personal income tax refund applications must be submitted to the relevant tax authority within three months after the end of the tax period (or within six months if filed by a tax advisor acting under power of attorney). Individuals relocating abroad who are directly employed by a Czech-based company—or by a branch of a foreign company—are subject to taxation on income from such employment starting from their first day of work. A Czech subsidiary or branch of a foreign company withholds tax monthly from the employee’s salary to fulfill annual tax obligations. Generally, if the relocated individual’s income derives solely from such an employment contract, the employer may prepare an annual tax settlement instead of requiring the individual to file a personal tax return. If a foreign company assigns the relocated individual to a Czech company under a service agreement, the foreign company must first register with the relevant tax authority as a personal income tax payer. The individual’s income will then be taxed via an annual personal income tax return. Furthermore, when fulfilling their personal tax obligations, relocated individuals must make advance tax payments either semi-annually or quarterly. These advance payments are calculated based on the previous year’s tax liability. 2. Czech corporate income tax regulations Corporate income tax has been set at 19% since 2010; a reduced rate of 5% applies to certain specific taxpayers (e.g., pension funds, investment funds). A legal entity is considered a Czech tax resident if its registered office or place of effective management is located in the Czech Republic. A ‘permanent establishment’ is not a legal entity; however, the prolonged presence of a foreign entity may render it subject to taxation—thus, income earned by foreign legal entities operating in the Czech Republic is taxable. When employees of a foreign company are dispatched to the Czech Republic to provide services for more than six months (183 days) within any consecutive 12-month period, this may constitute a ‘permanent establishment’ of the foreign company. If a foreign company sends multiple employees to the Czech Republic for the same duration, the 183-day threshold applies collectively—i.e., each day any one of them remains in the Czech Republic counts toward the total. Relevant double taxation treaties may modify these conditions or establish the existence of a permanent establishment. Foreign legal entities’ equipment located in the Czech Republic: A foreign legal entity is deemed to have a permanent establishment in the Czech Republic when it maintains a fixed place of business there—for example, an office, a venue for seminars or sales auctions, or a site where production equipment or other business assets are installed. Applicable double taxation treaties may amend the criteria for establishing a permanent establishment for foreign entities in the Czech Republic—or even trigger its creation. Moreover, if activities conducted through a fixed place of business in the Czech Republic are merely preparatory or auxiliary in nature, relevant double taxation treaties may preclude the existence of a permanent establishment.

Czech proposal to impose a 60% tax on excess energy profits

According to media reports, the Czech Ministry of Finance proposed on Thursday a windfall tax of up to 60% on excess profits generated by the energy sector. Czech Finance Minister Zbynek Stanjura announced the proposal at a press conference on Thursday, stating that the proposed tax would target excess profits in the energy sector from 2023 to 2025, generating USD 3.4 billion in revenue next year and USD 6 billion over the three-year period. The proposal requires parliamentary approval before implementation. Affected companies include electricity and natural gas producers, distributors, and traders; petrochemical companies; fuel wholesale traders; and fossil fuel extractors. The threshold at which profits become ‘excess’ will be determined as the average profit over the preceding four years plus 20%. These years notably include the years affected by the COVID-19 pandemic. This windfall tax proposal is not the first of its kind, as countries seek to offset massive budget deficits and runaway inflation—and to make the current energy environment more sustainable for both industry and citizens. In September, the European Commission proposed a 33% EU-wide windfall tax on profits exceeding 20% of fossil fuel companies’ average profits over the past three years.

Czech Lower House Gives Initial Backing to Windfall Tax on Refinery Sector

17 hours ago

The Czech lower house backed a windfall tax on refineries, targeting Poland's Orlen with a 50% levy on margin increases versus 2025. The government expects to raise 5.5 billion crowns by 2026-2027 despite industry opposition.

reuters

2026-09-21

Czech Government Reinstates Fuel Margin Caps, Plans Windfall Tax on Refineries

2026-10-14

Czech Lower House Gives Initial Backing to Windfall Tax on Refinery Sector

Czech Lower House Gives Initial Backing to Windfall Tax on Refinery Sector

FAQ