Accountancy in the Czech Republic

>> Allowances in the Czech Republic

Depreciation

The following tangible fixed assets cannot be expensed directly and must be depreciated for corporate tax purposes:

  • Separate movable assets and sets of movable assets with a purchase price exceeding CZK 40,000 and with an operational and technical life exceeding one year;
  • Buildings, houses, flats, non-residential premises and constructions;
  • Technical appreciation in the form of the modernization and reconstruction of leased assets performed by the lessee with a price exceeding CZK 40,000 (approx. EUR 1,500) and certain “other assets”.

Tangible fixed assets are classified into depreciation categories to which various depreciation periods from 3 to 50 years apply. Taxpayers are not obliged to depreciate an asset for tax purposes  every year. The start of depreciation  may be postponed and depreciation  may be interrupted in any year and continued in a later year without a  loss of depreciation potential.

Special rules apply to the depreciation of intangible fixed assets. The depreciation method differs depending on the year of acquisition and the type of intangible assets.

Investment incentives

The total amount of investment incentives is up to 45% of eligible costs, depending on the location and size of an enterprise.

Investment incentives and subsidies include

  • Job-creation grants – Financial support for the creation of new jobs (EUR 3,800

– 11,500 per new job);

  • Training grants – Financial support for the training and retraining of new employees (up to 50% of eligible training costs);
  • Full corporate income tax relief for up to ten years for new companies, partial relief for existing ones.

Tax credits and allowances

Resident and non-resident individuals may claim a basic personal tax allowance of CZK 24,840 per year. Czech tax residents may claim:

  • a tax allowance of CZK 24,840 for a spouse under strict conditions;
  • a tax allowance for children (CZK 15,204 for the first child, CZK 19,404 for the second child and CZK 24,204 for the third child and any subsequent child);
  • a tax allowance depending on the severity of disability (CZK 2,520 to

CZK 16,140);

  • a tax allowance for students (CZK 4,020);
  • a tax allowance for placing a child into a private pre-school activity and
  • other tax allowances.

In addition, various deductions from taxable income may apply, for instance, for interest paid on a mortgage, for private contributions paid to pension schemes and private life insurance, for gifts to charity, etc.

R&D tax allowances – R&D costs can be claimed twice, i.e., as a standard cost and as a special tax deduction in the tax return. There are no limits and the deduction may be claimed every year.

Education tax allowances – deduction of costs relating to vocational or professional educational activities. The deduction relates to costs incurred for the acquisition of assets and costs concerning various activities relating to the education of students on the entrepreneur’s premises.


Latest version updated 25th October 2017

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Czech Koruna

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