Increase in the Income Tax Rate

for Lump Sum Income Earners

The recent legislative update, effective from the beginning of October (NN 114/2023), has introduced changes to income tax rates. 

These amendments apply to the Income Tax Act, Contributions Act, Fiscalization Act, Corporate Income Tax Act, and Value Added Tax Act.

The fundamental changes are as follows:

1. Compensation for surtax: Local self-government units can use higher income tax rates to offset surtax revenue. This option applies exclusively to income categories from dependent work and self-employment.
2. Tax rate adjustments: New tax rates have been implemented for various income sources, including property and capital income, resulting in the following alterations:

• Income from rent, lease, and the disposal of specific property types, previously taxed at a rate of 10% plus surtax, is now subject to a 12% rate.

• Income from the time-limited transfer of property rights and property-related income from real estate and property rights disposal is now taxed at a rate of 24%.

• Income from dividends and profit shares based on equity interests, previously taxed at a rate of 10% plus surtax, now incurs a 12% rate.

• Income from self-employment, including lump-sum taxation for craftsmen, is now subject to a 12% rate.