Babiš government prepares to raise taxes on dividends and luxury real estate

Czech Prime Minister Andrej Babiš, appearing on Prima TV's Sunday programme Partie, signalled a possible increase in the tax on dividends and a heavier tax burden on investment property. According to him, the cabinet plans to push through these changes as early as next year.

Currently, the withholding tax on dividends in Czechia stands at 15%, compared to a base capital income tax rate of 25% in Germany and 27.5% in Austria. "We're losing 280 billion crowns on dividends. We have plenty of ideas, and we need to sort this out," the prime minister said.

Property tax and alcohol excise duty

The government is also considering raising the tax on investment property. According to Babiš, this wouldn't mean a blanket increase in property tax — rather, a higher rate would apply specifically to those who own several flats or houses.

However, the entire proceeds from property tax currently go to municipalities. The state budget would only benefit from an increase if the rules on redistribution — the so-called budgetary allocation of taxes — were changed as well.

Finance Minister Alena Schillerová (ANO) intends to raise excise duties, in particular on gambling, nicotine pouches and tobacco products. However, estimates suggest these measures would bring in only a few billion crowns for the budget.

Disagreements remain over a proposed tax on still wine. Babiš is open to introducing it, an idea also backed by Vladimír Pikora, chair of the Chamber of Deputies' budget committee (Motorists party). Schillerová, however, opposes the move, arguing that any decision on such a tax should be made at the EU level. "I'm not preparing anything of the kind right now," she said.

Banking on economic growth and better tax collection

The government says it is banking on economic growth driven by investment, along with improved collection of taxes and social insurance contributions. The planned return of electronic sales records is meant to help with this — according to Schillerová's calculations, the measure would bring in more than 14 billion crowns a year for the treasury.

Authorities also expect additional revenue from the "Cobra 26" system, aimed at tackling illegal employment and the related tax and social insurance evasion.

Source: novinky.cz