1. TAXATION TAXATION OF INDIVIDUALS IN THE CZECH REPUBLIC

2. Individuals are subject to income tax. Taxable income and tax liability of individuals are determined under the Income Tax Law.

3. TAXATION Taxable persons 1. Residents 2. Non-residents

4. TAXATION 1. Residents An individual is considered to be a resident of the Czech Republic: permanent home (residential address) permanent home (residential address) > 183 days in the Czech Republic in relevant calendar year, except stay for studies or medical treatment > 183 days in the Czech Republic in relevant calendar year, except stay for studies or medical treatment

5. TAXATION Taxable income Resident individuals are subject to tax on their worldwide income received in monetary or non-monetary income.

6. TAXATION Following income and capital gains are subject to income tax: employment income (salary/ benefits in kind, pension, director’s remuneration) employment income (salary/ benefits in kind, pension, director’s remuneration) business and professional income (royalties and licence fees) business and professional income (royalties and licence fees) income from capital (investment income, capital gains) income from capital (investment income, capital gains) rental income and rental income and other income other income

7. TAXATION Other income: Other income: –income from occasional activities > CZK 20,000 –capital gains on the sale of non-business assets, unless exempt –sale of property rights –alimony payments and pensions if not exempt –settlement payments and liquidation proceeds of companies and partnerships

8. TAXATION Every individual is taxed separately. The net result (income minus deductible expenses) is subject to a flat tax rate. Certain items of income are taxed separately by way of a final withholding tax rate.

9. TAXATION Personal deductions, allowances A. Deductions B. Tax credits

10. TAXATION A.Deductions Following items are deductible: donations for charitable purposes, described by law and deductible after a threshold. Including established in EU, Norway and Iceland. donations for charitable purposes, described by law and deductible after a threshold. Including established in EU, Norway and Iceland. mortgage interest for the main residence up to CZK 300,000 per year mortgage interest for the main residence up to CZK 300,000 per year premiums paid for private life/state insurance up to CZK 12,000 per year. premiums paid for private life/state insurance up to CZK 12,000 per year.

11. TAXATION B.Tax credits Resident and non-resident individuals may deduct from their aggregate income a at least a basic personal allowance for spouse and children.

12. TAXATION Losses Any negative result of the category of employment, capital and other income cannot be negative. Any negative result of the category of business and professional income cab be set off against a positive result of rental income. If the aggregate income (excluding employment income) is negative, losses may be carried forward for five taxable periods.

13. TAXATION Tax rates The tax rates consist of a flat rate of 15%.

14. TAXATION Withholding tax Following items of income derived by residents from domestic sources and are subject to a final withholding tax at a rate of 15%:

15. TAXATION dividends and other distributions dividends and other distributions interest on bonds interest on bonds Interest and other yields on money held in savings accounts, deposit accounts or non-business current accounts Interest and other yields on money held in savings accounts, deposit accounts or non-business current accounts Benefits from a state-contributory supplementary pension insurance or from a private life insurance, reduced by the premiums paid. Benefits from a state-contributory supplementary pension insurance or from a private life insurance, reduced by the premiums paid.

16. TAXATION Taxable period Income tax is assessed annually. The taxable period is generally the calendar year. Entrepreneurs deriving income from agriculture or trade may choose a different financial year upon approval of the authorities.

17. TAXATION 2. Non-residents Individuals who do not have their permanent residence in the Czech Republic are treated as non-residents.

18. TAXATION The income of non-residents is generally taxed according to the rules applicable to residents, unless a law or tax treaty provides otherwise. If 90% is derived from Czech sources the non-resident is entitled to deductions which residents are entitled to. If 90% is derived from Czech sources the non-resident is entitled to deductions which residents are entitled to.

19. TAXATION Non-residents are entitled to the basic personal tax credit.

20. TAXATION Non-residents are subject to the general withholding tax unless special rules apply:

21. TAXATION Remuneration paid to non-resident members of statutory executive and supervisory bodies of resident legal entities is subject to a final withholding tax at a rate of 15%. Remuneration paid to non-resident members of statutory executive and supervisory bodies of resident legal entities is subject to a final withholding tax at a rate of 15%.

22. TAXATION Income from independent activities and from services provided in the Czech Republic is subject to a final withholding tax at a rate of 15%. Income from independent activities and from services provided in the Czech Republic is subject to a final withholding tax at a rate of 15%.

23. TAXATION A rate of 15% applies to royalties and to income from the leasing of movable assets. A rate of 15% applies to royalties and to income from the leasing of movable assets.