CZECH GOVERNMENT UNVEILS BUDGETARY MEASURES

On Thursday, 11 May 2023, the Government of the Czech Republic held a press conference titled “Czech Republic in shape”, where it presented a package of measures with a major impact on public budgets.

The package is aims to stabilize public budgets while tempering the growth of inflation. Said package features both savings on the expenditure side and changes on the revenue side. At least in 2024, the intended savings are expected to exceed projected revenues.

In particular, the Government plans to increase the property tax and intends to raise the corporate income tax by two percentage points from 19% to 21%, bringing the Czech Republic closer to the EU average. Tax exemption of natural persons’ income from the sale of securities and shares in business companies granted due to the fulfilment of the so‑called time test of three or five years is now limited not to exceed CZK 40,000,000 per taxpayer. According to the Government, this is a sufficient limit for sale of shares in start-ups and family businesses.

Other measures include a reduction in the number of VAT, resulting in the basic rate of 21% and a reduced rate of 12%, an increase in social and health insurance contributions for self-employed persons and a cap on tax exemption for work performance agreements (dohody o provedení práce in Czech).

The package also includes an increase in the excise duty on tobacco products and tobacco alternatives, as well as a reduction in exemptions for mineral oil excise duties.

Over the course of June, the Government will approve the relevant bill in wording fit for discussion in the Chamber of Deputies. The package is expected to reach the Chamber of Deputies before the parliamentary recess, as the measures are to apply from January 1, 2024.

We will monitor the negotiations on the package throughout the legislative process and will keep you informed about the most important changes.

By Konečná & Zacha law firm, Lithuania, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact centraleurope@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.