The Czech tax system has now changed for non-resident executives of Czech limited liability companies, possibly leading to tax savings for high earning individuals.
Following changes to the Czech Income Taxes Act effective from January 2015, remuneration for non-resident executives will be subject to final withholding tax, rather than monthly payroll tax and annual reconciliation. For executives earning over CZK 1,277,328 per annum (2015 figures), this new system may lead to tax savings as the annual solidarity surcharge tax will no longer apply (currently 7% for earnings over CZK 1,277,328).
Companies may also choose to apply the new system to income earned by its executives during 2014, in which case changes to payroll must be made by March 2015 at the latest for the 2014 calendar year. In addition, any non-resident executives affected by these changes should be advised of the new approach, which may also remove the need for them to file a Czech income tax return.
- Czech Income Taxes Act, No. 586/1992 Coll., as amended
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