The Tax System

Since 1 January 1993, the tax system in the Czech Republic (CR) has evolved rapidly. The following outlines a number of issues now being encountered.

For foreign entities trading or investing directly into the Czech Republic, many sources of income arising in the CR are subject to Czech taxation at the withholding tax rate of 25 %. Sources include payments by Czech persons of royalties, technical know-how fees, interest and dividends. A wide network of treaties exists with the CR, which reduce the underlying rate of withholding from 25 % on such sources. A special withholding regime for cross border leasing also exists for financial types of lease where withholding is 1% of leasing payments.