1. Accounting

2. Basic characteristic of accounting
Accounting it is possible to characterize as a system, whose main
objective is:
Evidence and providing of information about company’s property and sources of its financing
Evidence of reproduction process in a company (realization of returns and consumption of costs)
For this purposes it is necessary to create the accounting system, where all these
information are held.
Three basic accounting statements that are parts of final accounts created at
the end of annual accounting period:
Balance sheet
Profit / lost account
Cash-flow statement
Accounting, Taxes

3. Ways of business activities filing
Tax evidence – defined by income tax law, used by physical persons having incomes from enterprise (traders, lawyers, consultants) that are not accounting entity.
Accounting – defined by accounting law, used by corporations and by physical persons that became accounting entities.
Physical person – accounting entity:
Returns from last year higher then 25 mil. CZK;
Voluntary decision of physical person;
Registration in trade register.
Accounting, Taxes

4. Basic differences between tax evidence and accounting
Tax evidence serves mainly for the right income tax base assessment, accounting provides more complex view of the company's management.
Economic result is ascertained:
In tax evidence – difference between incomes and expenditures
In accounting – difference between revenues (returns) and costs
Incomes – accepted money in cash or on bank account
Expenditures – decrease of money in cash or on bank account
Revenues – outputs expressed in CZK
Costs – consumption of productive factors
Accounting, Taxes

5. Balance sheet Accounting statement providing an overview about:
Property of a company, its structure and value (active capital)
Sources of property coverage (liabilities)
A company must complete following kinds of balance sheet:
Regular (completed by the last day of the accounting period)
Exceptional
preliminary (completed by the day of a company’s creation)
final (completed by the day of an ending of a company’s business activity)
Accounting, Taxes

6. Balance sheet – active capital (assets)
For particular kinds of the property there are described following three values:
Gross value (the origin value, a historical price of registered property)
Correction (expresses the attrition in the form of accumulated depreciation, or temporary value cut)
Net value (difference between the gross value and the correction)
Active capital (assets) of a company:
Receivables for the subscribed capital
Fixed (long-term) assets
Intangible fixed assets
Tangible fixed assets
Long-term financial assets
Current assets
Inventory
Long-term and short-term receivables
Short-term financial assets
Other property
Accounting, Taxes

7. Balance sheet - liabilities
Liabilities of a company:
Equity
Registered capital
Capital funds
Funds created from net (after-tax) profit (e.g. reserve fund)
Economic result from previous years
Undistributed profit fro past periods
Unrecoverd lost from past periods
Economic result from current
Other sources
Reserves
Long-term payables
Short-term payables
Bank loans (long-term, short-term)
Other liabilities
Accounting, Taxes

8. Profit / lost account
Provides information about reproduction process in a company (about costs, returns and the economic result creation)
From the profit and lost report it is possible to find out the creation of following economic results:
Economic result for the current company’s activity
Operational economic result
Financial economic result
Additional (exceptional) economic result
Profit and lost report includes the income tax creation
For the current company’s activity
For the additional (exceptional) company’s activity
Accounting, Taxes

9. The cash-flow statement
Describes the amount and the structure of cash-flows running during accounting period in the company
At the cash-flow report creation there are used data from the balance sheet and the profit and lost report
Separately there are described cash-flows in the frame of operational, investment and financial company’s activity
Whole cash-flows it’s possible to find out by the addition of
partial cash flows:
Operational
Investment
Financial
Accounting, Taxes

10. General structure of the cash-flow statement
Net economic result
+ depreciation of fixed (long-term) assets
+,- changes in the active assets state
+,- changes in the liability’s state
Operational cash flows
+ incomes from the fixed (long-term) assets sale
- purchase of fixed (long-term) assets
Investment cash flows
+ increasing of (bank) credits
- bank credits repayments
+ increasing of long-term sources (liabilities)
+ dotations
- payments of dividends
Financial cash-flows
Accounting, Taxes

11. Taxes

12. Overview of taxes in the Czech Republic
Taxes in the Czech Republic it’s possible to divide into:
Direct
Income tax
Of physical persons
Of corporations
Real-estate tax
Road tax
Inheritance tax, tax of donation and real-estate transfer tax
Indirect
Value added tax
Consumer tax
Ecological taxes (gas, solid fuels, electricity)
Accounting, Taxes

13. Income tax of physical persons
Income tax of physical persons is connected with following incomes:
Incomes from dependant activities
Incomes from enterprise and other independent activities
Incomes from lease
Incomes from capital assets
Other incomes
The way of the income tax calculation:
Assessment of partial tax bases for particular incomes as a difference between incomes and expenditures necessary for achieving of incomes
Assessment of tax base as an addition of partial tax bases
Decreasing of tax base by the items of the tax-free base (presents, interest from the bank credit in the frame of building savings, interest from mortgage credit intended for living assurance, etc.)
Calculation of income tax with using of suitable tax rate (multiplication of decreased income tax base and the tax rate)
Decreasing of the tax by the tax deductions
Accounting, Taxes

14. Income tax of corporations
It is calculated by the multiplication of tax rate by the tax base
Tax base is assessed:
Tax base = tax revenues – tax costs
Where
Tax revenues: revenues that, based on income tax law, are liable to income tax
Tax costs: costs that based on the income tax law decrease the tax base
Tax base it is possible to decrease by the deductible items defined by the income tax law (lost from past periods, costs for realization of development and research projects)
The final tax it is possible to decrease by the tax deduction defined by the income tax law (if the company employs handicapped persons)
Accounting, Taxes

15. Real-estate tax – land tax (Law n. 338/1992 Coll
Real-estate tax – land tax (Law n. 338/1992 Coll., about real-estate tax)
Object of the tax
Land in the Czech Republic registered in the real-estate register
Tax-payer
Owner of the land, sometimes or renter
Tax base
In the case of agriculture lands the tax base is defined as the price of the land established according to the special legislation
In the case of other lands (built-up area, building lands) the tax base is defined as the real land area
Accounting, Taxes

16. Real-estate tax – realty tax (Law n. 338/1992 Coll
Real-estate tax – realty tax (Law n. 338/1992 Coll., about real-estate tax)
Object of the tax
Constructions in the Czech Republic
Tax-payer
Owner of a construction
Tax base
In the case of building constructions is the tax base defined as a built-up area in square meters
In the case of a flat the tax base is defined as a size of a floor space of a flat in square meters multiplied by the coefficient 1.2
Accounting, Taxes

17. Road tax Law n. 16/1993 Sb., about road tax
Object of the tax
Vehicles intended for business
Tax-payer
Owner of a vehicle
Tax base
Engine content in cm3 in the case of personal cars
Addition of maximal granted weights per axles in tons and the number of axles in the case of semi-trailers
Maximal granted weight in tons and the number of axles in the case of other vehicles
Accounting, Taxes

18. Inheritance and donation tax Law n. 357/1992 Coll
Inheritance and donation tax Law n. 357/1992 Coll., about inheritance tax, donation tax and real-estate transfer tax
Object of the tax
Tangible or intangible property obtained with the inheritance or with the donation
Tax-payer
Person obtaining property with the inheritance or donation
Tax base
Price of movable and fixed property obtained with inheritance or donation
In the case of inheritance tax it is possible to decrease tax base by:
Liabilities of testator
Property freed from the tax
Notarial fees
Costs connected with the funeral of the testator
Tax rate
Size of the rate depends of on the value of property and the relationship of the tax-payer to the testator or donator
Accounting, Taxes

19. Real-estate transfer tax Law n. 357/1992 Coll
Real-estate transfer tax Law n. 357/1992 Coll., about inheritance tax, donation tax and real-estate transfer tax
Object of the tax
Transfer of the ownership of the real-estate between seller and buyer
Tax payer
Usually the seller, buyer guarantees
Tax base
Tax base is defined as the higher from following values:
Price assessed according to the special legislation
Selling price
Tax rate
At present it is 3 % from the tax base
Accounting, Taxes

20. Value added tax Law n. 235/2004 Coll., about value added tax
Object of the tax
Taxable fulfillments in the form:
Supply of goods
Providing of service
Tax-payer
Final consumer
Taxable person (person with duty to transfer the tax into state budget)
Producer or seller, whose returns for 12 months is higher then 1 mil. Kč, or person voluntary registered as a taxable person)
Tax base
Price of taxable fulfillment (price of goods or services)
Rates of value added tax
Basic rate 20 %
Reduced rate 10 % (since 2008)
Period of taxation
1 month in the case, when annual returns are higher then 10 mil. Kč
1 month based on voluntary decision of the taxable person in the case, when annual returns are higher then 2 mil. Kč and lower then 10 mil. Kč
Quarter in the case, when annual returns are lower then 10 mil. Kč
Accounting, Taxes

21. Consumer tax Law n. 353/2003 Coll. about consumer taxes
Object of the tax
Mineral oils, spirit, beer, wine and tobacco products
Tax-payer
Final consumer
Taxable person
All physical persons and corporations that produce defined products or physical persons and corporations to that defined products are imported
Tax base
Amount of defined products expressed in measure units
Tax rates
Defined by consumer tax law in absolute values (monetary units) per measure unit
Period of taxation
month
Accounting, Taxes