How the VAT System Changes With the Consolidation Package?

#LifeInCzechia The new consolidation package effective from January 2024 is supposed to help decrease the debt in national finances. It significantly influences the VAT system, including the cancelation of some benefits. What does it mean to you? Keep reading to find out more!


Will the changes affect you?


The Act on the Consolidation of Public Budgets amends 65 laws. It includes consolidation of VAT rates, increasing property tax and corporate income tax rates, and more. Citizens will lose some benefits and gain one new.


What tax credits will be affected?

The changes will take effect in the following categories:

  • Spouse tax credit
  • Student tax credit
  • Tax credit for suspended execution 


Spouse tax credit

The spouse tax credit could be applied to a husband or a wife (or alternatively a registered partner) living in the same household as the taxpayer. The credit amounts to CZK 24,840 if the spouse didn’t make an income of more than CZK 68,000 per year. 

From 2024. this tax credit can only be applied to a spouse caring for a child up to 3 years of age.


Student tax credit

Up to now, a student who is continuously preparing for a future profession by studying or undergoing prescribed training until the age of 26, or until the age of 28 for full-time doctoral studies at a university, could claim a tax credit of CZK 4,020. 

This tax credit will be abolished in 2024. It will therefore be the last time it can be claimed in the 2023 tax return.


Tax credit for child placement

The tax credit for child placement currently corresponds to the amount of expenses demonstrably incurred by the taxpayer for the placement of the taxpayer’s dependent child in a preschool facility. The maximum amount equals the minimum wage, i.e. CZK 17 300 for this year.

This tax credit will also end starting in 2024.


Tax credit for suspended execution

Lastly, there is one new tax credit introducedfor suspended executions! The amount of compensation is 30% of the recovered claim and the maximum value of the pledged claim is CZK 1,500. Therefore, the maximum discount for one suspended execution is CZK 450.


Other tax credits (basic taxpayer credit, disability tax credit, and tax credit for a dependant child) remain unchanged with the same conditions and amounts. 


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Image source:  Forbes

Monika Tužinská

Hey, my name is Monika. I love exploring the world and learning new languages. I worked in the USA for several months and moved to Brno a year ago, so I know how it feels to live in a different country. Let's discover Czech Republic together.

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