Page 18 - CEE Tax Guide 2025

Czech Republic

Forvis Mazars s.r.o.
Pod Dráhou 1637/4,
170 00 Praha 7 – Česká republika
Phone: (+420) 224 835 730
www.forvismazars.com/cz

Corporate taxes and other direct taxes Investment incentives in a form of tax relief are
available for up to 10 taxable periods.
The general corporate income tax (CIT) rate is 21%, A 60% windfall tax applies to certain fossil fuel,
with a 5% rate for basic investment funds and 0% for energy, and banking sector taxpayers from 2023
pension funds. to 2025 on a specially calculated tax base.
Tax losses may be carried forward for up to 5 taxable A 15% withholding tax generally applies to dividends,
periods and also carried back for 2 taxable periods. royalties, interest, and Czech sourced income,
The maximum amount that may be carried back unless reduced by a double tax treaty (DTT). The
from one taxable period is limited to CZK 30 million Czech Republic has over 90 DTTs concluded.
(approx. EUR 1.2 million). If there is no DTT or agreement for the exchange
An R&D tax allowance of up to 110% of eligible of information in place, the payments are subject
R&D costs can be deducted from base deduction. to a 35% withholding tax.
Thin capitalization rules limit tax-deductible
financial expenses from related parties exceeding 4× Dividend distributions and capital gains
equity (6× for banks and insurance companies). on subsidiary shares are tax-exempt if conditions
The EU ATAD rules apply – covering deductibility are met. Interest and royalty payments may also
of exceeding borrowing costs; CFC rules; Exit be exempt under the EU Interest and Royalty
taxation; Hybrid mismatch rules. Directive with tax authority approval.
Road tax is imposed on selected heavy trucks
Transfer pricing in Czech Republic and trailers.
A real estate tax applies to land and buildings,
Arm’s length principle Since 1993
with tax rates generally depending on the type
Documentation liability Since 2006 (scope of property, while the final amount of tax may
of documentation
is only recommended) also be influenced by local rates (applied by local
authorities). There is no real estate transfer tax.
APA Since 2006
VAT and other indirect taxes
Country-by-Country From FY 2016
liability
The standard VAT rate is 21%, the reduced VAT
Master file-local file The recommended scope rate is 12%.
(OECD BEPS 13) of TP documentation
applicable corresponds to the The reduced VAT rate is applicable on goods such
OECD Guidelines. as foodstuffs and additives usually intended for food
Penalty preparation, products used as food supplements
or substitutes, feed for animals, tap water, seeds,
lack of documentation No – plants, medicines, medical devices meeting certain
tax shortage 20% on tax conditions, newspapers and magazines meeting
underpayment or 1% certain conditions, real estates meeting criteria
of decreased tax loss. +
late payment interest for social housing etc. The reduced VAT rate does
not apply on beverages except selected beverages
Related parties 25% < Direct or indirect control (e.g. milk, soya milk). The reduced VAT rate is further
or personally related.
applicable on services such as accommodation,
Safe harbors Low value-added catering services except serving beverages other
services:3%-7% mark-up.
than tap water and selected beverages, water
Level of attention paid 9/10 distribution and wastewater removal, heating
by Tax Authority and cooling, a ground mass passenger transport,

Central and Eastern European tax guide 2025 Forvis Mazars 18