The Czech Republic is famous for many things; the beautiful architecture in Prague, the multitude of castles found around the country, and its rich cultural history. If you're also interested in paying less in taxes, moving to Czechia could be an interesting option, as the country is also well-known for something perhaps less exciting to see in a picture: having some impressively low tax rates.
The country has one of the lowest income taxes in the region, paying a flat rate of 15%, and there was talk earlier this year of reducing this percentage even further. For comparison, the United States' income tax begins at 10%. However, because the U.S. income tax is progressive and increases along with the amount earned, few people pay that small percentage and instead likely pay 22% or more.
Other taxes are more similar in the two countries; corporate income tax in the Czech Republic is around 19%, while the U.S.'s is 21%. The social security tax is about 6.5% of monthly earnings, comparable to the 6.2% implemented in the United States. There is a large difference in the Value Added Tax (VAT), a tax added to account for production cost. The VAT in Czechia is 20% while the U.S.'s is 10%. While this difference may seem vast, this figure does not include the additional sales taxes implemented by individual state and local governments in America.
Even with these low tax rates, the Czech government covers some essential programs for its citizens. One of these is healthcare, which is nearly universal for all citizens, as the government still covers those without a job. Czechia’s healthcare system is known for its quick access to care and low cost, and this reputation has caused the country to become a location for medical tourism. Some critics say that affordability has been pursued almost to a fault. Private healthcare is also an option in the country, and some residents fear that there may be too great a difference between the two systems.
Additionally, higher education is provided free of cost at public universities in the Czech Republic, given that applicants meet the requirements to be admitted into the school. Like healthcare, this extends to students of any nationality, even those from outside the European Union. This has caused the country to have a higher percentage of international students than in the surrounding regions. However, there may be administrative fees or fees for specific programs, like those provided in English.
One reason that Czechia can provide these services to its citizens while maintaining lower tax rates is its high percentage of employer contributions to the payroll tax. This shift in burden allows the individual workers' taxes to be low while still implementing an overall rate similar to its neighboring nations. Below is a figure from 2013 that shows the contributions employers and employees make in payroll taxes and the individual income tax. The trend seen here continues today.
This figure illustrates that although some taxes may be lower than others, the total percentage is similar to that of other countries. It is important to consider all these factors when looking at a different location's taxation rate. For some, benefits like healthcare and education provided in the Czech Republic are alluring, and if you're interested in paying less in taxes, this country may be an option for you.