On what profits should corporate income tax be paid

This information will help you to determine which income is subject to tax for corporate income tax payers.

If you are a payer of corporate income tax, income from all activities and from the disposal of all assets is subject to tax (with a few exceptions).

The tax base (profit before tax) is then the difference by which your income exceeds your expenditure.
The tax base is based on the profit or loss or the difference between income and expenditure (if you keep single-entry bookkeeping). The profit or loss, or the difference between income and expenditure, is further reduced or increased by the items prescribed by law, and the final result of these adjustments is the tax base from which the tax liability is calculated.

This applies generally to all payers of corporate income tax.

If you are a taxpayer – a tax non-resident, you only have an obligation to tax income from sources in the Czech Republic as defined in the Income Tax Act.

If you are a tax resident of a state with which the Czech Republic has concluded a double taxation treaty, the final taxation of this income may be affected by this treaty, which takes precedence over the Czech Income Tax Act. Income from sources within the Czech Republic includes, for example:

• income from activities performed through a permanent establishment located in the Czech Republic,
• income from services provided in the Czech Republic,
• income from the use and from the transfer of real estate located in the Czech Republic,
• income in the form of dividends, licences and interest paid by Czech tax residents or permanent establishments of tax non-residents located in the Czech Republic,
• income from the transfer of interests in business corporations with their registered office in the Czech Republic.

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