Debate over increase in income tax and lowering of expenses deductible for cultural workers.
5.1.5 Tax laws
There are currently no tax incentives for investment in the field of culture in the Czech Republic (CR). The only case is the incentives for the film industry that are part of the "Programme for the Support of the Film Industry" (see also chapter 4.2.3). According to this Programme, the stakeholder is entitled to claim up to 20% of expenses paid after fulfilling all the stipulated conditions. According to Act No. 586/1992 Coll. on Income Tax, individuals can deduct the value of a donation for cultural purposes from their tax base if the total amount of donations exceeds 2% of their tax base or is equal to at least 1 000 CZK during the taxation period. It can amount to a maximum of 10% of the tax base (§15). Business entities can deduct the value of a donation for cultural purposes from their tax base if the value of the donation is at least 2 000 CZK.
Pursuant to Act No. 235/2004 Coll. on VAT on 1 January 2010 the VAT rate increased – the basic rate went up from 19% to 20% and the reduced rate from 9% to 10%. An amendment to the VAT Act No. 370/2011 Coll., effective from 1 January 2012, increased the reduced VAT from 10% to 14%. The reduced tax rate applies to specific cultural activities such as entrance fees to exhibitions, concerts, films, theatres and other cultural and entertainment performances, radio and television fees, artistic and other entertainment including the activities of writers, composers, painters, sculptors, actors, show and cabaret performers and other independent artists. The reduced tax rate is applied to the import of artwork, collector's objects and antiquities, but only when imported. The basic tax rate applies to their delivery in the CR and their purchase from another Member State. According to the amendment to the VAT Act, from 1 January 2013 the rate was increased again from 14% to 15% and from 20% to 21% (see also chapter 4.3).
According to the Copyright Act, artists are included in the category of self-employed persons and they are subject to the Income Tax Act for other self-employed activity. If an artist does not claim individual expenses, they can claim general expenses of 40% of their income. The tax base can be reduced by the non-taxable part of the base and exemption items. The income tax is 15% from the tax base. In connection with the economic crisis a debate has also be raised by the Ministry of Finance over increasing income tax and decreasing the lump expenditures deductible of 40%.