The Czech Republic has reported a strong start to 2025 in terms of tax collection, with the state collecting CZK 339.3 billion in taxes in the first quarter, marking a 5.3% increase compared to the same period last year. According to the Ministry of Finance, this growth was mainly driven by a sharp rise in excise duties and value-added tax (VAT).
Excise Duties Lead Growth in Tax Revenue
Excise tax collection rose by 11.4% year-on-year to CZK 43.2 billion. This increase was primarily fueled by higher revenues from tobacco products, which saw changes in tax rates and the introduction of new duties on e-cigarette cartridges and nicotine pouches. Mineral oil taxes also contributed, reflecting a rebound in economic activity and increased transportation demand.
VAT Remains the Primary Revenue Source
VAT continues to be the state’s most significant revenue source, with collections reaching CZK 138.6 billion in Q1 2025—an increase of CZK 7.3 billion, or 5.5%, compared to the previous year.
Income Taxes Show Positive Momentum
The government collected CZK 69.3 billion in personal income tax, a year-on-year increase of 10.1%, while corporate income tax revenues amounted to CZK 63.4 billion, up 2.8%. Extraordinary taxes levied on energy companies, petrochemical firms, and banks brought in an additional CZK 9 billion. However, this was CZK 4 billion less than the same period in 2024.
Distribution of Shared Taxes
Several taxes in the Czech system are shared between the central government and local authorities. VAT, corporate income tax, and personal income tax are partially distributed to regional and municipal budgets. In 2025, municipalities are entitled to 24.16% of these shared revenues, with regions receiving 9.45%. Municipalities also receive an additional 1.5% share of income tax on employment income, and they retain 100% of property tax revenues.
State Budget Deficit and Public Finance Outlook
In Q1 2025, the state budget collected CZK 240 billion in tax revenues, excluding social contributions, which represents a 6.9% year-on-year increase. The state budget deficit at the end of March stood at CZK 91.2 billion, an improvement of CZK 13.8 billion compared to the same period in 2024. Despite this, it was still the fourth-deepest March deficit since the foundation of the Czech Republic.
Public Deficit Shrinks, Public Debt Rises
According to the Czech Statistical Office (CZSO), the public sector deficit for 2024 decreased to 2.2% of GDP, down from 3.8% in 2023. The government recorded a deficit of CZK 177.2 billion last year. This improvement was driven by stronger revenue growth—mainly from social contributions—outpacing expenditure increases.
However, the total public debt rose from 42.5% to 43.6% of GDP. “The general government budget result for 2024 ended with a deficit of CZK 177.2 billion. Compared to the previous year, total revenues, particularly from social contributions, increased more than expenditures. The debt-to-GDP ratio rose to 43.6%,” stated Helena Houžvičková, Director of the Government and Financial Accounts Department at CZSO.
Economic Outlook
While the Czech Republic has made progress in reducing its deficit, rising public debt continues to pose a challenge. Nevertheless, the solid performance in tax collection, especially in excise and income taxes, suggests a resilient economy amid ongoing recovery efforts.
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Sources: Nel primo trimestre, lo Stato ha riscosso 339,3 miliardi di CZK di tasse. CZK, 5,3 punti percentuali in più rispetto all’anno scorso | ČeskéNoviny.cz; CZSO: Il deficit delle finanze pubbliche è sceso al 2,2% del PIL l’anno scorso – Patria.cz
