At the end of last week, the Czech government presented the so-called recovery package, which should have an overall positive impact on the balance of the state budget in 2024-2025, in the amount of CZK 147.5 billion. In total, several dozen changes to tax laws are proposed across all tax types.

Hereby, we list at least some of the proposed changes:

• An increase in the corporate income tax rate from the current 19% to 21%, regardless of the amount of income (revenues) or the tax base;
• Limitation of the tax deductibility of costs for the purchase of passenger cars for business purposes to CZK 2 million;
• Personal income tax rate of 15% only up to 36 times the average wage (at present, up to 48 times), above it a rate of 23%;
• Cancellation of the second reduced rate, retaining only two VAT rates: 21% and 12%;
• Increase in real estate tax rates up to twice the current rates;
• Increase in insurance premiums for the self-employed and cancellation of exemptions for agreements to complete a job.

At the moment, the draft is subject to an amendment procedure and will subsequently go through the standard legislative process. The legal effectiveness of the mentioned changes is planned from January 1, 2024. The recovery package is available here.

We will carefully monitor further developments and inform you about their progress in due course.