Investor Presentaiton
Taxation of
legal entities
Corporate income tax is levied on the profits of legal
entities, primarily limited liability companies (s. r. o.) and
joint-stock companies (a. s.).
Although partnerships are also legal entities, the profits of a
general partnership (v. o. s.) are not subject to corporate tax;
instead, the partners' shares of profits are taxed in their own
hands.
In the case of a limited partnership (k. s.), the limited
partner's share of the profits is subject to corporate income
tax at the level of the limited partnership, while the general
partner's share is taxed in the same way as in the case of
a general partnership. In addition, trusts are subject to
corporate tax even though they are not legal entities.
A foreign company's branch or permanent establishment
is generally subject to tax on the same basis as a company.
They may also be taxed on a deemed profit basis, which is
usually a percentage of the revenues generated in the Czech
Republic, or a percentage of costs. Furthermore, taxpayers
may ask tax administrators for binding rulings on the manner
of determining the tax base of a permanent establishment (or
a registered branch of a foreign entity) located in the Czech
Republic.
Generally, the tax base is the difference by which income
exceeds the expenses relevant to the taxable period.
In 2022, the corporate income tax rate is 19 percent.
A reduced rate of five percent applies to the income of
qualifying investment funds and a reduced rate of zero
percent applies to qualifying pension funds. Full or partial
tax relief from corporate tax may be claimed for certain
qualifying investments (see Chapter 3 - Investment
incentives and state aid). Capital gains are generally included
in income and taxed at the same rate.
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