Tax changes from 2024. Find out what's coming

As part of the consolidation of public finances, the government has presented a package of measures to help the over-indebted state treasury. Most of the planned adjustments concern taxes and other compulsory levies. Read on to find out what's in store.

The proposed changes should apply from 1 January 2024 if the legislative process can be completed by the end of this year. For now, it remains to be seen what form the tax reform will eventually take - as a number of adjustments may be made during the negotiations in the Chamber of Deputies. The main changes currently planned are as follows:

Corporate income tax:

• Increase in the corporate tax rate from 19% to 21%;
• limiting the tax deductibility of vehicle acquisition costs to CZK 2,000,000;
• abolition of tax deductibility of silent wine up to CZK 500 as a gift for representation.

Personal income tax:

• Reintroduction of employee sickness insurance at 0.6%;
• limitation of the tax credit for the spouse to the care of a child up to 3 years of age;
• abolition of childcare allowance;
• abolition of the student discount;
• abolition of tax exemption for non-cash benefits for employees;
• abolition of the exemption for excess meal vouchers;
• shifting the 23% personal income tax threshold from four times to three times the average wage;
• capping tax relief for work performance agreements and introducing registration of FTEs;
• increasing the social insurance assessment base for self-employed workers by 5 percentage points;
• stricter taxation of raffle and gambling winnings.

Value added tax:

• Reduction in the number of VAT rates to a basic 21% and a reduced 12% (e.g. medicines, food, magazines);
• shifting selected goods and services from the reduced to the standard VAT rate (e.g. hairdressing services, draught beer, shoe, leather goods and bicycle repairs, cleaning services, newspapers, etc.).

Other taxes:

• Increase in property tax and introduction of a regular indexation component to respond to inflation;
• anincrease in excise duties on tobacco, tobacco products and alcohol;
• introduction of a new excise duty on nicotine sachets and e-cigarette refills.

In addition to changes in the tax area, the government is also preparing other measures to reduce the state budget deficit, such as reducing subsidies, abolishing selected tax offices and reducing support for building savings, as part of the so-called Recovery Package. A full list can be found on the Ministry of Finance website.