Recovery Package
The Czech government has presented a Recovery Package with 58 measures that represent savings of up to CZK 147.5 billion in the state budget. The government plans to approve the legislative wording during June 2023, with the first reading in the Chamber of Deputies before the holidays and the effective date from 1 January 2024.
The government's consolidation efforts aim to reduce the public deficit from 3.5% of GDP this year to an estimated 1.8% of GDP in 2024 and 1.2% of GDP in 2025, mainly through expenditure savings. Savings will be made in state administration, public sector salaries will be reduced and some national subsidies will be cut. On the revenue side, revenues are expected to increase from excise duties on tobacco and alcohol, gambling taxes, the abolition of a total of 22 tax exemptions, the reintroduction of sickness insurance for employees at 0.6%, an increase in corporate income tax to 21%, levies on self-employed persons and property tax, the collection of which is currently negligible for public finances and even a loss for the state budget.
Among the tax changes, we highlight the following:
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Corporate income tax: increase of the tax rate to 21%; limitation of tax deductibility of the cost of acquiring passenger cars for business purposes to CZK 2 million.
- Personal income tax: tax rate of 15% only up to 36 times the average wage (currently approximately CZK 121,000 per month), then the rate of 23%; abolition of the following tax exemptions: spouse discount only if caring for a child under 3 years of age, nursery school fees, student tax discount, tax exemption for non-monetary employee benefits, tax exemption for excess meal vouchers, etc.
- Value added tax: there will be only two tax rates of 12% and 21%
- Excise duties: introduction of a new excise duty on nicotine sachets and e-cigarette refills, increase in the tax rate on cigarettes, tobacco, cigars etc (+ 5-10% per year) and heated tobacco (+15% per year)
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Gambling tax: increase of the second tax rate to 30% (applies to live games, betting, raffles, etc.)
More information can be found here (in Czech only).
