{"id":9907,"date":"2024-02-01T14:22:20","date_gmt":"2024-02-01T14:22:20","guid":{"rendered":"https:\/\/axevera.com\/?p=9907"},"modified":"2025-06-27T13:01:31","modified_gmt":"2025-06-27T13:01:31","slug":"summary-comparison-of-the-tax-burden-between-the-czech-republic-neighbouring-countries-italy-and-hungary","status":"publish","type":"post","link":"https:\/\/axevera.com\/en\/2024\/02\/01\/summary-comparison-of-the-tax-burden-between-the-czech-republic-neighbouring-countries-italy-and-hungary\/","title":{"rendered":"Summary comparison of the tax burden between the Czech Republic, neighbouring countries, Italy and Hungary"},"content":{"rendered":"\n

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In this article, we will explore a brief comparison of the tax burden between the Czech Republic and its neighbouring countries, including Austria, Germany, Poland and Slovakia. Expanding the analysis, we will also include Hungary and Italy.<\/p>\n\n\n\n

The analysis is based on a comparison of the rates and peculiarities of the main taxes common to these countries, such as personal and corporate income tax, value added tax, withholding tax, capital gains tax (corporate and individual), inheritance and gift tax, and, where applicable, wealth or net worth tax. The analysis will take into account the recent changes introduced in these taxes for the current year, highlighting the effects manifested by these changes.<\/p>\n\n\n\n

Income tax<\/strong><\/h2>\n\n\n\n
Country\/Subject<\/strong><\/td>Czech Republic<\/td>Italy<\/td>Austria<\/td>Germany<\/td>Poland<\/td>Slovakia<\/td>Hungary<\/td><\/tr>
Company (CIT)<\/td>21% <\/strong>(for tax periods starting in 2024, previously 19%)<\/td>24%<\/strong><\/td>23% <\/strong>(25% until 2022, reduced to 24% in 2023 and again in 2024)<\/td>Tax + solidarity surcharge: 15.825%<\/strong>;
Business tax: 8.75% – 20.3%.<\/strong>  <\/td>		19%<\/strong><\/td>21%<\/strong><\/td>9%<\/strong><\/td><\/tr>
People physics (PIT)<\/td>15% <\/strong>e 23%<\/strong><\/td>43%<\/strong><\/td>55% <\/strong>(until 2025, after that it will be 50%)<\/td>Base rate 45%<\/strong>, plus surcharges<\/td>32%<\/strong>, plus 4% <\/strong>solidarity tax on incomes above PLN 1 million<\/td>25%<\/strong>    <\/td>15%<\/strong>  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The situation that emerges from the data makes it possible to outline various trends and fiscal policies of the analysed states.<\/p>\n\n\n\n

The Czech Republic <\/strong>recently raised the CIT rate to 21% from 2024, showing a commitment to increase tax revenues, in line with policies introduced this year to decrease the fast-growing public debt. These changes also affect individuals, leaving the PIT rates of 15% and 23% unchanged but increasing the tax base. This still allows the Czech Republic to remain a relatively favourable tax destination.<\/p>\n\n\n\n

Turning to Italy<\/strong>, the CIT rate of 24% places it among the countries with the highest corporate taxes in the region. This situation is exacerbated when considering PIT, with a top rate of 43% affecting incomes over EUR 50,000, confirming the country’s low tax burden.<\/p>\n\n\n\n

Austria <\/strong>maintains a competitive position with an IRES at 23%, suggesting a business-friendly environment and confirming it through the downward trend of rates by one percentage point per year since the end of the pandemic. The PIT at 55% is among the highest in the region, influencing individual tax planning. It must be said, however, that this rate applies to incomes over EUR 1 million, revealing a real tax burden on average not far from other countries with similar volumes of value production.<\/p>\n\n\n\n

Worthy of investigation is the situation in Germany<\/strong>, where corporate profits are subject to two taxes, corporation tax and trade tax. The rate of the former is 15%, increased to 15.825% by the solidarity surcharge of 5.5%. In addition, municipal business tax (MBT) is levied. It depends on the federal rate (3.5%) and a multiplier applied to the basic amount to determine the effective tax burden, which averages 14%. These dynamics set the final average burden at 29.825%, up to a maximum of 32.975%.<\/p>\n\n\n\n

By contrast, the basic personal income tax rate is 45%, although much of the income is in the middle range, with rates from 14% to 42% in geometric progression.<\/p>\n\n\n\n

Poland <\/strong>offers a business-friendly tax environment with CIT at 19%, the second lowest among the countries under analysis. The basic PIT is 32%, with only one reduced bracket for annual incomes below EUR 27,000. There is also a solidarity surcharge of 4% for incomes over one million Z\u0142oty (approx. 230,000 euro).<\/p>\n\n\n\n

Slovakia<\/strong>, with an CIT of 21%, remains competitive, but it might be interesting to monitor possible future changes. Again, there are only two rates for individuals, the reduced rate of 19% set at 176 times the survival level and the basic rate at 25%.<\/p>\n\n\n\n

Hungary <\/strong>stands <\/strong>out with a CIT of 9%, ranking as the lowest in the target, in line with policies aimed at attracting foreign investment. The single-rate PIT without brackets of 15%, which is easy to interpret and apply, is also among the lowest in the region, contributing to the country’s tax competitiveness.<\/p>\n\n\n\n

Value Added Tax (VAT)<\/strong><\/h2>\n\n\n\n
<\/td>Czech Republic<\/td>Italy<\/td>Austria<\/td>Germany<\/td>Poland<\/td>Slovakia<\/td>Hungary<\/td><\/tr>
VAT<\/td>12% – 21% <\/strong>from 2024 (pre-reform 10% – 15% – 21%)<\/td>4% – (5%) – 10% – 22%<\/strong><\/td>10% – 13% – 20%<\/strong><\/td>7% – 19%<\/strong><\/td>5% – 8% – 23%<\/strong><\/td>5% – 10% – 20%<\/strong><\/td>27<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The landscape of Value Added Tax (VAT) in the Czech Republic <\/strong>has undergone a substantial change as of this year, the two previous reduced rates of 10 and 15 per cent being merged into a single rate of 12 per cent. This is, of course, accompanied by a substantial reorganisation of taxation on multiple categories of goods, which is discussed in detail in the article on the recent reform [available at the following link: https:\/\/axevera.com\/en\/2024\/01\/26\/implementation-of-the-announced-2024-tax-changes\/<\/a> ].<\/p>\n\n\n\n

Italy <\/strong>maintains a standard VAT rate of 22%, and reduced rates apply to a number of specific supplies, including 4% for certain essential or particularly important purchases. A 5% tariff applies to health services, the sale of food herbs, specific transport services, district heating services and certain child-related products. In addition, a 10% tariff is imposed for electricity supplies for designated uses, listed medicines and pellets.<\/p>\n\n\n\n

Specific supplies of goods and services, explicitly listed in the law, are exempt from VAT.<\/p>\n\n\n\n

The active VAT law in Austria <\/strong>sets a standard rate of 20 per cent. A specific category of goods and services falls under a reduced VAT rate of 10 per cent, which includes articles and supplies that are widely distributed and of special consideration. A smaller reduction covers, among others, seeds, plants, animals and specifically listed services. There are also exemptions from Austrian VAT for certain transactions, such as export transactions. In two specific areas, Jungholz and Mittelberg, a reduced VAT rate of 19% applies.<\/p>\n\n\n\n

Sales and services in Germany <\/strong>are generally subject to a standard VAT rate of 19%, although there are reduced rates of 7% and 0%. In response to the COVID-19 pandemic, Germany has temporarily reduced the VAT rate on meals (excluding beverages) in restaurants and catering services from 19% to 7%, a measure in force until 31 December 2023.<\/p>\n\n\n\n

VAT rates in Poland <\/strong>are structured with a standard rate of 23%, reduced rates of 8% and 5%, a zero rate and exemptions. The various categories are identified similarly to the other countries mentioned above. It should be noted that, in order to counter the effects of inflation, Poland had temporarily reduced the VAT rate on basic foodstuffs (excluding those related to food and beverage services) to 0% from 1 February 2022 until 30 June 2023, thus returning to the regular regime from before the beginning of 2024.<\/p>\n\n\n\n

The Value Added Tax (VAT) system in Slovakia<\/strong> is <\/strong>characterised by a standard rate of 20% on taxable supplies, with some exceptions taxed at 10%. It should be noted that, as of 1 January 2023, an additional reduced rate of 5% applies to the supply of buildings meeting specific conditions supported by the state under the social housing programme.<\/p>\n\n\n\n

A particular aspect of the Central European state is the ‘cash accounting’ scheme, which, in specific cases, allows suppliers to defer payment of VAT until they receive payment from customers. However, this scheme is exclusive to entities established in Slovakia that meet certain criteria.<\/p>\n\n\n\n

The standard VAT rate in Hungary <\/strong>is 27%, applied to most goods and services. Again, there are various reductions, to 18% and 5% respectively (which also includes residential property until 31.12.2024), as well as a number of exempt or excluded transactions.<\/p>\n\n\n\n

Withholding tax<\/strong><\/h2>\n\n\n\n
<\/td>Czech Republic<\/td>Italy<\/td>Austria<\/td>Germany<\/td>Poland<\/td>Slovakia<\/td>Hungary<\/td><\/tr>
Residents  <\/td>15\/0\/0;<\/strong><\/td>0\/0 or 26\/0;<\/strong><\/td>0 or 27.5\/0 <\/strong>or 24 <\/strong>or 27.5\/0<\/strong>;<\/td>25\/25\/0; <\/strong>only interest paid by banks to a resident is subject to WHT.<\/td>19\/NA\/NA<\/strong><\/td>0 or 7\/0 or 19\/0<\/strong><\/td>NA<\/strong><\/td><\/tr>
Non-residents<\/td>15 \/ 15 \/ 15 <\/strong>(35% of the WHT applies to residents of countries outside the EU and EEA with which the Czech Republic does not have an enforceable DTT or TIEA)<\/td>26 \/ 26 \/ 30<\/strong><\/td>0 or 27.5 <\/strong>\/ 0 or 20<\/strong><\/td>25 \/ 0 \/ 15 <\/strong>or on request as reduced by EU directive \/ double taxation treaty \/ national law  <\/td>19 \/ 20 \/ 20<\/strong><\/td>7, 19 or 35 \/ 19 or 35<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

[the three values indicated refer to taxes due on: Dividends \/ Interest \/ Royalties and are all to be understood as a percentage].<\/p>\n\n\n\n

The rates applicable for payments due for these particular categories of income are subject to particular and detailed regulations that vary from country to country, with different technical aspects depending on the issuer and recipient, the nature of the transaction, and the EU or non-EU residence of the parties. Some of the most relevant cases are shown below the percentages in the table.<\/p>\n\n\n\n

It is worth noting the peculiarity that characterises Poland <\/strong>and Hungary: <\/strong>the <\/strong>former fails to indicate in its legislation the treatment of tax on interest and royalties, effectively leaving this category of transactions tax-free; the Hungarian legislation does not provide for any withholding on outgoing payments made to foreign business entities.<\/p>\n\n\n\n

Other taxes (corporate and individual capital gains, inheritance and gifts, wealth and net worth)<\/strong><\/p>\n\n\n\n

Country\/tax<\/strong><\/td>Czech Republic<\/td>Italy<\/td>Austria<\/td>Germany<\/td>Poland<\/td>Slovakia<\/td>Hungary<\/td><\/tr>
Corporate capital gains (capital gains)<\/td>Normal CIT rate<\/td>Normal CIT rate.<\/td>Normal CIT rate<\/td>normal corporate tax rate<\/td>Normal CIT rate<\/td>Normal CIT rate<\/td>normal CIT rate POSSIBLE exemption scheme<\/td><\/tr>
Individual capital gains<\/td>Normal PIT rate<\/td>26% or normal PIT rate<\/td>27.5%<\/td>25% + 5% <\/strong>(26,375%)<\/strong><\/td>Real estate: normal PIT rate Shares: 19%.<\/strong><\/td>19%<\/strong><\/td>Normal PIT rate. Social tax: 13%<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

As can be seen, in EU countries corporate capital gains are generally treated under the same tax regime as corporate income.<\/p>\n\n\n\n

It is important to point out the presence in Italy <\/strong>of <\/strong>the facilitated PEX regime, which allows the exemption of 95% of the capital gain, provided that specific conditions are met that prove that the profit comes from an investment activity and not speculation. Similarly, in Hungary<\/strong>, the capital gain is exempt provided the conditions of non-speculation are met.<\/p>\n\n\n\n

It should be noted that the Czech Republic<\/strong>, Poland <\/strong>(with relief limited to the transfer of shares at a reduced rate), and Hungary <\/strong>maintain the assimilation to the regime applicable to normal income also for individual capital gains. In Austria <\/strong>and Slovakia, <\/strong>on the other hand, a separate and different PIT rate is set, as is the case in Germany, which also requires a charitable surcharge in some cases.<\/p>\n\n\n\n

In Italy, <\/strong>the taxation of capital gains varies depending on the subject involved. Small consumers who do not consider the activity as their main business benefit from an advantage with a fixed rate of 26%.<\/p>\n\n\n\n

Finally, Hungary<\/strong>, whose tax base is set at the level of normal income, applies an addition of 13% if certain conditions are not met.<\/p>\n\n\n\n

Country\/tax<\/strong><\/td>Czech Republic<\/td>Italy<\/td>Austria<\/td>Germany<\/td>Poland<\/td>Slovakia<\/td>Hungary<\/td><\/tr>
Successions<\/td>N\/A<\/td>8%<\/strong><\/td>N\/A<\/td>50%<\/td>3% – 20%<\/td>N\/A<\/td>18%<\/td><\/tr>
Donations<\/td>Normal PIT rate<\/td>8%<\/strong><\/td>N\/A<\/td>50%<\/td>3% – 20%<\/td>N\/A<\/td>18%<\/td><\/tr>
Wealth\/ Net assets<\/td>N\/A<\/td>IVIE: 0.76%.<\/strong> VATFE: 0.2%.<\/strong><\/td>N\/A<\/td>N\/A<\/td>N\/A<\/td>N\/A<\/td>N\/A<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

In the context of the Czech Republic, <\/strong>for example, <\/strong>we have no specific data on inheritances, but donations are subject to the normal PIT rate. Similarly, there is no specific legislation for the taxation of net assets.<\/p>\n\n\n\n

In Italy, <\/strong>there <\/strong>is an interesting approach with a fixed rate of 8% for both inheritances and gifts. In addition, the country has specific policies on equity, such as IVIE at 0.76% for foreign real estate and IVAFE at 0.2% for foreign investments.<\/p>\n\n\n\n

In Germany, <\/strong>high rates of 50% for inheritances and gifts are considerable, but there is a preferential option of 9% for residential property. A tax rate of 18% is applied to net assets, with the addition of a charitable surcharge.<\/p>\n\n\n\n

Poland <\/strong>adopts a variable approach, with rates ranging between 3% and 20% for inheritances and gifts, depending on the relationship or kinship between the parties involved.<\/p>\n\n\n\n

Finally, in Hungary, <\/strong>a flat rate of 18% emerges for both inheritances and gifts.<\/p>\n\n\n\n

Source: https:\/\/taxsummaries.pwc.com<\/a><\/p>\n\n\n\n

Image source:<\/p>\n\n\n\n

Graphic source: https:\/\/storyset.com\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In this article, we will explore a brief comparison of the tax burden between the Czech Republic and its neighbouring countries, including Austria, Germany, Poland and Slovakia. Expanding the analysis,…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[525],"tags":[567,536,571],"yst_prominent_words":[],"class_list":["post-9907","post","type-post","status-publish","format-standard","category-en","tag-2024-2","tag-czech-economy","tag-taxes"],"_links":{"self":[{"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/posts\/9907","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/comments?post=9907"}],"version-history":[{"count":3,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/posts\/9907\/revisions"}],"predecessor-version":[{"id":14438,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/posts\/9907\/revisions\/14438"}],"wp:attachment":[{"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/media?parent=9907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/categories?post=9907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/tags?post=9907"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/axevera.com\/en\/wp-json\/wp\/v2\/yst_prominent_words?post=9907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}