Which taxes changed in January 2024
The Ministry of Finance has announced a number of significant innovations for the year 2024. Most of the measures are included in the consolidation manoeuvre approved at the end of the previous year.
Here are the main novelties:
- Reduction of VAT rates: A key point of the tax reform involves a reduction of VAT rates from three to two. This change will have a significant impact on goods and services that used to enjoy the reduced rates of 10% and 15%. Now, such goods and services will be subject to the new reduced rate of 12%, while keeping the base rate of 21% unchanged.
- Increase in corporate income tax: Another major change concerns the increase of the standard corporate income tax rate from 19% to 21%.
- Property tax: A revision of the coefficients will lead to an average increase of 80% in property tax, generating new municipal revenues estimated at CZK 10 billion. These coefficients will be administered by the municipalities, introducing variations in the tax burden from one city to another.
- Personal Income Tax: Significant changes involve personal income tax, with the abolition of tax discounts for dependent wives and students. The threshold for the increased tax rate of 23% will be calculated as a multiple of 3 of the minimum wage instead of 4. For employees, a contribution for sickness benefits of 0.6% will be introduced, with a cap on company benefits set at approximately CZK 22,000 per year.
- Contribution burden for the self-employed: A path to increasing the contribution burden for the self-employed (OSVČ) begins, in order to partially reduce the gap with employees. Two key coefficients will be changed: the share of the average salary for determining the minimum contribution base will increase from 25 % to 30 %, while the share of earnings, which determines the contribution base, will increase from 50 % to 55 %.
You can find all the in-depth information on the 2024 tax changes and novelties on the Ministry of Finance website at the following link: https://www.mfcr.cz/cs/ministerstvo/media/tiskove-zpravy/2023/prehledne-ktere-zmeny-prinese-rok-2024-nejen-pro-o-54178.
Source: https://www.mfcr.cz/
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