Tax and accounting changes: what awaits us from 2024?

As part of the consolidation of public finances, the government has introduced measures to help the over-indebted treasury, the so-called consolidation package. It was signed by the President on Wednesday 22 November 2023, followed by its publication in the Collection of Laws. Most of the planned adjustments concern taxes and other compulsory levies. Read on to find out what the main changes are - they will start to apply from 1 January 2024 (unless otherwise stated for individual items).

Corporation tax:

  • increase in the corporate tax rate from 19% to 21%;
  • introduction of a limit on the entry price for the purpose of tax depreciation for passenger cars of CZK 2 million. CZK 2.5 million for the depreciation of capital assets;
  • abolition of tax deductibility of silent wine as a gift for representation;
  • introduction of the possibility not to tax unrealised exchange rate differences.

Value added tax:

  • introduction of three VAT rates: 0%, reduced 12% and basic 21%;
  • a zero rate will apply to books;
  • the 12% rate will cover e.g. accommodation and catering services, newspapers and magazines, foodstuffs or construction work on houses and flats;
  • the 21% rate will, on the other hand, be newly applied to, for example, hairdressing services, municipal waste collection, or the supply of cut flowers and firewood.

Personal income tax:

  • abolition of school fees and the student discount;
  • limiting the tax credit for spouses to childcare for children up to 3 years of age;
  • shifting the threshold for the progressive 23% tax rate from four times to three times the average wage;
  • introducing a cap on employee non-monetary benefits (e.g. sporting events) at half of the average wage per year;
  • capping tax relief for performance agreements and introducing registration of FTEs;
  • non-monetary meals provided at the workplace and meal vouchers will have the same regime as the cash meal allowance;
  • abolition of the deduction in the case of a contribution to a trade union;
  • abolition of the tax exemption for gratuitous transactions up to 2 thousand CZK per year; and social assistance to overcome exceptionally difficult circumstances;
  • introduction of a limit of 40 million CZK in the case of application of the exemption of income from the sale of securities or shares when the time test is met (effective from 2025 - a special definition for the acquisition price will be applicable to shares acquired by the end of 2024);
  • reduction of the limit for exemption of lottery or raffle winnings from CZK 1 mill. to CZK 50 thousand.

Insurance premiums:

  • increase in the sickness insurance rate for self-employed persons by 0.6 percentage point (to 2.7%);
  • reintroduction of a 0.6% contribution to sickness insurance on employees' wages (employers will continue to pay 2.1% for their employees as before);
  • an increase in the assessment base for social security contributions for self-employed persons from 50% to 55%;
  • an increase in the minimum assessment base for self-employed workers from 2026 (linked to average wages).

Accounting:

  • change in the calculation of net turnover;
  • the possibility of keeping accounts in the so-called functional currency - British pounds, euros or US dollars;
  • introduction of an obligation to produce a sustainability report.

Tip: For details on the new definition of turnover and foreign currency accounting, see: accounting changes from 2024.

Excise and energy taxes:

  • introduction of a new tax on e-cigarette refills;
  • a 10% tax increase on cigarettes, cigars and smoking tobacco (plus further increases in subsequent years);
  • a 10% increase in excise duty on alcohol in 2024 and also in 2025 (still wine remains unchanged).

Property tax:

  • increase in the real estate tax up to 1.8 times from 2024;
  • introduction of an inflation coefficient which will automatically increase the tax by the inflation of the previous period from 2025.

In addition to changes in the tax and accounting area, the government is also preparing other measures to reduce the state budget deficit as part of the so-called Recovery Package. A full list can be found on the Ministry of Finance website.

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