The bill eliminates the withholding tax on select employment income from 1 January 2027.
The Czech Republic published a bill in the Official Gazette (Regulation 360/2025 Coll.) on 29 September 2025, eliminating the withholding tax on select employment income, starting 1 January 2027.
The bill eliminates withholding tax on payments to corporate officers of legal entities if they are individuals who are not Czech tax residents. Currently, this income is taxed at a flat 15% rate, regardless of the amount. Under the new rules, future tax payments will be based on this income, eliminating unequal tax treatment based on residence.
Most of the other changes outlined in the bill are set to come into effect on 1 January 2026.
Withholding tax is a type of tax deducted directly from certain types of income by the payer, such as an employer or bank, and sent to the tax authorities. This means the recipient gets their income already taxed and often does not need to include it in their tax return.
