Friday, January 4, 2013

2013 VAT Increase

As of January 1, the VAT (Value Added Tax) has increased again.  It already went up last year but given the current state of the global economy it is increasing again.

The Czech government pushed through a few changes in order to bring public finance deficit to less than 3% of GDP.  Here's what has changed...

The tax on goods and services has been raised 1%.  The new tax on food, medicine, newspapers, books, heating, water and public transportation is now 15%.  There is now a 21% tax on everything else.

The price for electricity will increase, on average, by +2% and the price for natural gas will increase 4%.

For people who have had regulated rent, the 5-year deregulation process has ended, so the rent on around 700,000 flats throughout the country will increase.

People who are self-employed and claim flat tax deductions are no longer eligible for tax breaks for children or for spouses with low incomes.

People who earn more than 100.000 Kč (~$5,000) per month, which is almost 5 times the average salary, will now pay an extra 7% income tax on everything over 100.000 Kč.  I've heard this referred to as a "solidarity increase".

Update:  In 2021 the 7% solidarity tax was eliminated.

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