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’. 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 1000 CZK during the taxation period. It can amount to a maximum of 15% 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 2000 CZK and the maximum deduction from the total is 5% of a person´s tax base.
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. There was a further increase in the lower VAT rate from 14% to 15% and from 20% to 21% on 1 January 2013. From 1 January 2015 a second lower VAT rate of 10% was introduced. Books, including illustrated books for children and sheet music were included under this rate. Effective 1 July 2020 the reduced VAT of 10% was extended to the provision of services that facilitate admission to a cultural event or a historical structure, regardless of whether the event takes place indoors or outdoors.
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. On 1 January 2021 a flat tax is to come into effect that is for self-employed persons working on the basis of a trade license who have a maximum annual income of 800 000 CZK. The total amount will be comprised of an income tax payment and social and health insurance payments (the amount of the flat tax is set at 5 740 CZK) in place of an annual income tax payment and mothly insurance payments.