Corporate Income Tax

Quick Overview

• The basic corporate income tax rate is 21%.
• The calculation generally begins with the pre-tax profit, which is adjusted in accordance with the Income Tax Act.
• The tax base may be increased, for example, by certain non-deductible expenses; conversely, it may be reduced by tax-exempt income or deductible items.
• The adjusted tax base is rounded down to the nearest thousand crowns, and the applicable tax rate is then applied to it.
• Tax credits may be deducted from the resulting tax if certain conditions are met, and any advance payments already made are then taken into account.

In the case of corporate income tax, a single incorrectly assessed item can alter both the tax base and the resulting tax liability. If you are unsure whether a specific expense is tax-deductible, whether you can claim an exemption, or how to correctly determine the tax base, our attorneys will help you assess your specific tax situation and choose the correct course of action.

Who Pays the Tax (Corporate Income Tax Payers)

Taxpayers include legal entities with their registered office in the Czech Republic (residents—taxed on worldwide income) as well as legal entities with their registered office abroad (non-residents—taxed on income from sources within the Czech Republic). For non-residents, the key consideration is whether they have a permanent establishment in the Czech Republic—if so, the income attributable to that establishment is taxed.

What Is Subject to Tax

Income from all activities and from the disposal of all assets (whether in cash or in kind) is subject to tax, unless otherwise provided by law. The law also lists income that is not subject to tax, as well as separately exempt income (see below).

Corporate Income Tax Rate (Amount of Income Tax)

The basic corporate income tax rate is 21%. There are also special rates: 5% for basic investment funds and 0% for pension funds.

Note the separate tax base: certain types of income (particularly specified income from foreign profit shares for residents) are taxed at a separate rate of 15% and are not included in the last known tax liability for advance payment purposes

Tax Base: From Net Income to Taxable Income

The tax base is derived from your accounting net income (profit or loss) and is further adjusted for so-called tax base-reducing items and deductible items.

Items Increasing the Tax Base

Certain expenses are not tax-deductible. These typically include entertainment expenses —such as hospitality, refreshments, and gifts.

Please note: This does not apply to all forms of “marketing”—the law distinguishes between advertising (which is tax-deductible under certain conditions) and entertainment expenses (which are not tax-deductible).

Other common non-tax-deductible items: fines and penalties, certain donations (unless you claim them as a deduction), inventory shortages, etc.

From practice: A common mistake is to automatically consider every accounting expense as a tax-deductible expense. For disputed items, it is therefore necessary to assess not only how they are recorded but also their purpose, legal requirements, and, if necessary, to document their connection to business operations.

Items that Reduce the Tax Base

Conversely, items that reduce the tax base include, for example, exempt income (see below), income that has already been taxed once and is permitted by law to be excluded from the tax base, or so-called deductible items.

• Tax Exemptions: The law lists a long list of exempt income for legal entities. The most important ones in practice are: Exemption for dividends received under the parent-subsidiary regime, provided that the statutory conditions are met (e.g., minimum ownership stake and holding period, additional conditions for subsidiaries outside the EU), as well as various exemptions for both remunerated and non-remunerated income (e.g., certain membership fees, gratuitous transfers, etc.).
• Deductions from the tax base: These include , in particular , tax losses, donations, and deductions for research and development or for supporting vocational training. Tax losses may be carried back to the two immediately preceding tax periods up to a total limit of 30 million CZK, and/or carried forward to the five subsequent tax periods. As for donations—if you have made a charitable donation worth at least 2,000 CZK, you may deduct its value from your taxable income. However, you may deduct no more than 30% of your taxable income. A deduction for research and development or for supporting vocational training can then be claimed if such activities are carried out. However, you must have pre-approved and clearly defined objectives and project documentation.

Tax Deductions

Corporate tax credits are few in number, but they can be substantial:

Tax credit for employing people with disabilities: 18,000 CZK per employee with a disability (Levels 1–2) and 60,000 CZK per employee with a more severe disability (Level 3). A proportional portion of the average annual full-time equivalent is also applied.

Tax credit in the form of an investment incentive: may be claimed if the conditions of the Investment Incentives Act are met.

How to Calculate Corporate Income Tax

If you’re wondering how to calculate a company’s income tax, it’s not enough to simply multiply the accounting profit by the 21% rate. First, you need to adjust the net income by including or excluding items that the law specifies as part of or excluded from the tax base.

1. Take the pre-tax net income from the financial statements (profit/loss).
2. Add non-tax-deductible expenses (e.g., entertainment expenses, contractual penalties and fines, donations not eligible for statutory deductions).
3. Subtract items that reduce taxable income (e.g., tax-exempt income, income already taxed separately).
4. Claim deductible items (tax loss—both carrybacks and carryforwards, R&D deductions, or professional training deductions).
5. Round the result down to the nearest thousand CZK and multiply by the tax rate (usually 21%).
6. Reduce the tax by any credits (e.g., for employing people with disabilities, investment incentives).
7. Compare this amount with the advance payments you’ve made, and pay the difference (or you’ll have an overpayment).

Numerical Example (LLC Model)

Assumptions: Pre-tax profit of 5,000,000 CZK. During the year, the entity recorded the following:

• Entertainment expenses (hosting business partners) CZK 80,000 → non-tax-deductible expense → +80,000.
• Contractual penalty of 20,000 CZK → typically a non-tax-deductible expense → +20,000.
• Dividend received from a subsidiary; conditions for exemption met → −300,000 (deductible item).
• Tax loss carried forward of 400,000 CZK → deductible item − 400,000.

Tax base before deductions: 5,000,000 + 80,000 + 20,000 − 300,000 = 4,800,000 CZK.

After applying the loss: 4,800,000 − 400,000 = 4,400,000 CZK.

Rounded down to the nearest thousand: 4,400,000 CZK. Tax at 21%: 924,000 CZK.

The company employs 1 worker with a severe disability (Level 3) → 60,000 Kč discount

Resulting tax = 864,000 CZK.

In practice, therefore, it is not enough to simply take the accounting profit and calculate 21% of it. The difference between the accounting profit and the tax base can be significantly affected by non-tax-deductible expenses, tax-exempt income, tax losses, or other deductions.

Not sure which items in your accounting records increase or decrease your tax base? We’ll help you assess your specific situation from a legal perspective and alert you to any risks before you file your tax return.

Tax Calculator: If you are filing your tax return on the MOJE daně portal, the system will calculate the tax amount on your return and verify that all formal requirements are met.

Tax Period

For corporate income tax, you can choose either the calendar year or the fiscal year (any 12 consecutive months).

Income Tax Installments (Who Pays Them and When)

To avoid surprises regarding the amount of income tax due at the end of the year, the law often requires companies to make advance payments—advance tax payments.

You do not pay advance payments if your income does not exceed 30,000 CZK; municipalities and regions also do not pay advance payments.

For income between 30,000 and 150,000 CZK, you pay two semi-annual advance payments —each equal to 40% of the last known tax amount (due by the 15th day of the 6th and 12th months of the tax period).

For amounts over 150,000 CZK, you pay four quarterly advance payments equal to 25% of the last known tax (due by the 15th day of the 3rd, 6th, 9th, and 12th months).

Summary

The corporate income tax rate in 2026 is 21%, although special rates apply to certain entities. The tax calculation is generally based on the pre-tax net income, which is adjusted primarily for non-tax-deductible expenses, tax-exempt income, and deductible items, such as tax losses, donations, or—subject to certain conditions—deductions for research and development or professional training. The adjusted tax base is rounded down to the nearest thousand crowns, and the applicable rate and any tax credits are then applied to it. A tax loss may be carried back to the two preceding tax periods up to a total limit of 30 million CZK or carried forward to the five subsequent periods. In 2026, provided certain conditions are met, the value of donations may be deducted up to 30% of the tax base. The amount and frequency of advance payments depend on the last known tax liability: no advance payments are due for amounts up to 30,000 CZK; for higher liabilities, they are paid semiannually or quarterly.