The Czech Republic taxation is based on the historical evolving. The definition of the institute named «taxation» or «tax» in legal form doesn’t exist.

There were three reforms of the tax system after the creation of Czechoslovakia in 1918 since January 1, 1993 a new tax system has been introduced in the Czech Republic.

The basic legal form is contained in Act of the Czech Republic No. 212/1992 Sb., on system of taxes.

The system of taxes in the Czech Republic consists of:

1. Value added tax including the import tax. 2. Excise duties: a) from carbohydrate fuels and lubricants; b) from spirits; c) from beer; d) from vine; e) from tobacco and tobacco products. 3. Income taxes: a) of individuals; b) of legal entities. 4. Real estate property tax. 5.Road tax. 6. Inheritance and donation tax. 7. Real estate property transfer tax. 8. Environmental tax.

It is not admissible to raise any other taxes than those stipulated in the above mentioned paragraph. But for the enviromental tax, every tax has its individual legal form.

The basic division of taxes in the Czech Republic is direct and indirect taxes. There are only two indirect taxes : the value added tax and; excise duties.

The others are direct taxes.

Act of the Czech Republic No. 586/1992 Sb., on income taxes regulates – a) the individual income tax and b) the legal entites income tax.

The individual income tax shall be collected from the following income: a) income from dependent activity and function benefits; b) income from business and from other independent gainful activity; c) capital property income; d) lease income; e) other income. Many kinds of income are exempted from the tax.

Individuals are taxpayers of the individual income tax. Taxpayers of the legal entity income tax shall be defined as persons who are not individuals and organisational components of state according to the special legal regulation. The Central bank of the Czech Republic is exempted from the tax.

The tax return must be filed by everyone whose annual income subject to the individual income tax exceeds 10, 000 Czech crowns. The tax return must be filed also by the person whose annual income subject to the individual income tax has not exceeded 10, 000 Czech crowns and by these who report a tax loss. The legal entity income tax return shall be filed even if the tax payer reports a zero tax base or if he reports a tax loss.

ACT of the Czech Republic No. 357/1992Sb., on inheritance tax, donation tax and real estate transfer tax regulates a) the inheritance tax; b)the donation tax; c) the real estate transfer tax.

The inheritance tax is paid by an heir who has acquired the inheritance or a part thereof from a will, from law or from both titles on the basis of a final and conclusive decision of the relevant authority.

The donation tax shall be paid by the acquirer; in case of donation abroad, the tax shall be always paid by the donor. Except for donation abroad or from abroad, the donor shall be a guarantor.

The real estate transfer tax shall be paid by: a) the vendor; in this case, the acquirer shall be a guarantor; b) the acquirer where the real estate property has been acquired in the course of enforcement of a decision or in the course of an execution according to a special regulation, by expropriation, in bankruptcy or composition, by a positive prescription by public auction; c) the person entitled from an easement or from another performance corresponding to an easement; d) both the transferor and the acquirer in case of a barter of real estate property; in this case, the transferor and the acquirer shall pay the tax jointly and severally.

If the real estate property is transferred or passed from an undivided co-ownership of spouses or into an undivided co-ownership of spouses, each of the spouses shall be deemed a separate taxpayer and their shares shall be deemed the same unless the shares are agreed on or laid down otherwise. In case of co-owners, each co-owner shall be deemed a separate taxpayer and shall pay the tax according to the size of his share.

For the purpose of calculation of the inheritance tax, the donation tax and the real estate transfer tax, the persons shall be classed with three groups according to the relation of the taxpayer to the deceased person, to the donor (donee) or to the acquirer (transferring person). Relations established by way of adoption shall be set equal to relationships among relatives.

The I. group shall be formed by – relatives in the direct line and spouses.

The II. group shall be formed by – a) relatives in the collateral line being sisters or brothers, nephews, nieces, uncles and aunts; b) husbands or wives of children (sons-in-law and daughters-in-law), the spouse’s children, the spouse’s parents, the parents’ spouses and persons having lived with the acquirer, donor or deceased person in a common household for at least one year before the transfer or death and having cared for the common household for this reason or been thrown upon the acquirer, donee or deceased person by maintenance.

The III. group shall be formed by – other individuals and by legal entities.

The taxpayer must file a tax return concerning the inheritance tax, donation tax and real estate transfer tax with the locally competent tax administrator within 30 days from the day.

ACT of the Czech Republic No. 338/1992 Sb., on real property tax, shall provide for the real property tax consisting of: a) land tax; b) building tax.

The land tax shall be paid by the owner of the land. In case of lands owned by the Czech Republic (hereinafter the «state»), the tax shall be paid by – a) the organizational component of the state or by the state organization established according to special legal regulations; b) legal entity having a right of permanent use or whose right of permanent use was transformed into a commodatum agreement according to a special regulation.

The building tax shall be paid by the owner of the building, flat or separate non-residential premise.

The taxpayer must submit a tax return to the relevant tax administrator by January 31 of the tax period. A tax return shall not be submitted where it was submitted by the taxpayer in any of the preceding tax periods. However, where a change of the circumstances being decisive for assessment of the tax including a change of the person of the taxpayer occur in comparison with the preceding tax period, the taxpayer must declare the tax by January 31; in these cases, the tax may be declared either by filing a tax return or by filing a partial tax return.

ACT of the Czech Republic on road tax has No. 16/1993 Sb. The purpose of this law is to regulate the road tax (hereinafter the «tax») being the form of taxation of using land communications in the Czech Republic by road vehicles¹⁾ (hereinafter the «vehicles»).

The tax shall be paid by the individual or legal entity who
a) is an operator of a vehicle registered in the Czech Republic with the Vehicle Register and is recorded in the technical card of the vehicle;
b) uses in the territory of the Czech Republic a vehicle registered abroad or who uses a vehicle in the technical card whereof a person is recorded as the operator who died, was dissolved or wound-up or who uses a vehicle whose operator has been deregistered from the transport inspection authority register.

The tax shall be also paid by – a) the employer who pays travel reimbursements to his employee for use of a personal car or a connecting vehicle thereof save where the tax duty has already arisen to the operator of the vehicle; b) a person using a vehicle being registered and defined as a state mobilization reserve (the «222 Program»); c) a steady workplace or another organizational component of a person with seat or permanent residence abroad.

The tax return shall be filed by the taxpayer having the tax duty until January 31 of the calendar year following the lapse of the tax period even if the taxpayer’s tax return is elaborated by a tax counselor.

Some of the persons are exempted from the taxation. The most important tax schedule with many exmptions is there for non profit organisations in the acts.

Literature:

1. Act of the Czech Republic No. 212/1992 Sb., on system of taxes
2. Act of the Czech Republic No. 586/1992 Sb., on income taxes
3. Act of the Czech Republic No. 357/1992 Sb., on inheritance tax, donation tax and the real estate transfer tax
4. Act of the Czech Republic No. 338/1992 Sb., on real property tax
5. Act of the Czech Republic No. 16/1993 Sb., on road tax