On 22 November 11, the President signed a bill amending some laws in connection with the consolidation of public budgets, the so-called consolidation package[1]. From 01/01/2024 we are expecting a lot of changes and in this article we will focus on those related to taxes.
Value added tax
Section 47 paragraph 1 of the Value Added Tax Act will be significantly changed. From 2024, the current three VAT rates will be replaced by only two, namely 12% and 21%. For example, food, plants, animals or newspapers will fall under the lower tax rate. The complete list of goods subject to this reduced rate is set out in Annex No. 3 of the aforementioned law.
Increase in corporate income tax
The Income Tax Act will not remain unchanged either. It is worth noting the amendment to Section 21, Paragraph 1, in which the corporate income tax rate will be 21% instead of the current 19%.
Changes relating to natural persons
Another innovation is that natural persons who already exceed 36 times instead of the original 48 times the average salary per year will be subject to a higher, i.e. 23%, tax rate. There was also a change in the discount for the wife/husband, which can only be used for the spouse who takes care of a child under 3 years of age. At the same time, from 2024 it will not be possible to apply the student tax discount and the discount for placing a child. In addition, employees will pay more for health insurance.
Property tax
The amendment to the Real Estate Tax Act will increase the rates of this tax to approximately 1,8 times. For example, for a residential building, the basic tax rate according to § 11 paragraph 1 letter a) will increase from CZK 2 per 1 m² to CZK 3,50. The tax revenue obtained in this way will go to municipalities, but they will receive less funding from shared taxes, which should have a positive effect on the state budget.
In conclusion, we would like to add that the tax increase will also affect tobacco products, gambling, and the price of the highway stamp will also increase. The consolidation package contains a large number of other changes, in today's article we tried to summarize the most fundamental ones from our point of view.
Source: leagle.one
Mgr. Lucie Špičková, Attorney
Nikol Zlámalová, legal trainee
[1] All changes to the laws are listed here: https://www.psp.cz/sqw/text/tiskt.sqw?o=9&ct=488&ct1=0&v=SZ
