The tax system in the Czech Republic is similar to the tax systems of most advanced European countries. They are the main income of the state budget. We can divide taxes into: direct taxes (income taxes, property taxes) and indirect taxes. Income taxes and indirect taxes, i.e. value added tax (VAT), make up the majority of state budget revenues.
Taxes related to real estate
Personal property tax
Every year property owners pay a personal property tax. This type of tax is different from other taxes because it is paid in advance. In addition, the the tax return on the property is only submitted once. After that, the tax office only calls for a payment each year. A new tax return is sent only when there are substantial changes in the property. For ordinary flats, you can expect to pay several hundred CZK per year.
Property transfer tax
The property tranfer tax is four percent of the tax base. Since November 2016, the buyer of the property is the one who has to pay this tax.
The basis of the tax is either 100% of the purchase price or 75% of the estimated value. The property transfer tax is calculated from the amount which is bigger. Most of the time, the purchase price is higher than the estimated value.
Here is an overview of the other current taxes in the Czech Republic:
1. Direct taxes:
- Personal income tax
- Corporate income tax
- Personal property tax
- Inheritance income tax
- Gift tax
- Property transfer tax
- Road tax
2. Indirect taxes:
- Value Added Tax (VAT)
- Excise tax
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