Czech Republic/ 5.1 General legislation  

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 incentives for the film industry that are part of the "Programme for the Support of the Film Industry" (see also chapter 4.2.6). According to this Programme, the stakeholder is entitled to claim up to 20% of expenses paid after fulfilling all the 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 at least 1 000 CZK in the period of taxation. It can be 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.

In conformity with Act No. 235/2004 Coll. on VAT as of 1 January 2010 the VAT rate was increased – the basic rate from 19% to 20% and the reduced rate from 9% to 10%. The 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 including 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 importation of artwork, collector's objects and antiquities, but only when imported. The base 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 a uniform VAT is to be introduced at a level of 17.5%. However, it is currently become increasingly apparent that by the end of 2012 further changes will be introduced affecting VAT. Debates at the political level are considering a further increase of the VAT rate or rates beyond 17.5%; see also chapter 4.3.

According to the Act on Copyright, artists are included in the category of self-employed persons and they are subject to the Act on Income Tax 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 expenditure deductible of 40%.

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