When you start a company in Czechia, one of the first questions is: which taxes will I actually pay? For a limited liability company the answer is clearer than it seems — there are only a few main taxes, and most entrepreneurs really deal with two or three. This overview brings them together in one place and points you to the details where you will need them.
First, one important distinction that trips many people up. A company (s.r.o.) and a sole trader are not the same and do not pay the same taxes. A company is a separate legal person and taxes its profit through corporate income tax; a sole trader is a natural person and pays personal income tax on their business. The lines below are about the company — if you run a business as a sole trader, see the article on sole trader taxes instead.
Corporate income tax: the foundation
The company's main tax is corporate income tax. It is paid on profit — the difference between revenue and tax-deductible costs — and for 2026 the rate is 21%. So if a company makes a taxable profit of one million crowns, it pays CZK 210,000 in income tax. The more genuine, legitimate costs a company reports, the lower the tax base — which is why what you are allowed to claim really matters. A detailed breakdown of rates, costs and exceptions is in the article on corporate income tax for an s.r.o.
Dividends: the second layer people forget
Here comes the part that sets companies apart from sole traders the most. The profit left after tax belongs to the company — not automatically to you. If you want to pay it out to yourself as a shareholder, it is a dividend (a share of profit), and that is subject to a further 15% withholding tax. Taxation is therefore two-tier: first 21% at the company level, then 15% when it is paid to the shareholder.
A practical example: out of CZK 1,000,000 in profit the company pays 21% (CZK 210,000) and is left with CZK 790,000. When you pay this remainder out as a dividend, a further 15% is withheld (CZK 118,500) — so roughly CZK 671,500 actually reaches your account. It is worth planning for this in advance; part of the profit is often kept in the company for further growth precisely for this reason.
VAT: not a tax on profit, but unavoidable
Value added tax confuses people the most, because it is not a tax on profit — the company merely collects it from customers and remits it to the state. What matters is the point at which it applies: a company becomes a VAT payer once its turnover exceeds CZK 2,000,000 in a calendar year (from 1 January of the following year), and once it exceeds CZK 2,536,500, the very next day. There are two rates — the standard 21% and the reduced 12%. When and how to register is covered in the text on VAT and registration.
Setting up taxes, VAT and accounting for an s.r.o. is where the accounting and tax firm Wellbens can help.
Employer contributions: the tax that isn't a "tax"
If the company employs someone, another regular payment to the state appears — insurance contributions for employees. From the gross wage the company, as the employer, pays social and health insurance (on top of what is deducted from the employee), so the real cost of a wage is noticeably higher than the figure "on the payslip". It is not a tax in the strict sense, but in cash-flow terms it behaves similarly and needs to be planned for.
In summary: what the company pays
For an ordinary s.r.o. it can be summed up simply: 21% corporate income tax on profit, 15% withholding tax when dividends are paid out, VAT (21% / 12%) once turnover is exceeded, and insurance contributions for employees, if the company has any. Most entrepreneurs are really affected by the first three. The key to peace of mind is proper accounting and someone who watches the deadlines — then taxes are just a line in the plan, not a source of surprises.
Frequently asked questions
What tax on profit does an s.r.o. pay in 2026?
Corporate income tax, at a rate of 21% on the taxable profit (the difference between revenue and tax-deductible costs). It is the company's main tax and is paid by the company itself, not by its shareholders.
Why do people talk about double taxation of dividends?
Profit is taxed first at the company level at 21%. When a shareholder pays out a share of profit (a dividend), a further 15% withholding tax is deducted from the payment. Out of the original profit, the shareholder is left with roughly two thirds after both taxes.
Does a company need VAT right from the start?
Not necessarily. A company becomes a VAT payer once its turnover exceeds CZK 2,000,000 in a calendar year (or the very next day if it exceeds CZK 2,536,500). Until then it can operate as a non-payer, or register voluntarily.