DPFO is the Czech acronym for Daň z příjmů fyzických osob, which translates to Personal Income Tax. It is one of the most significant direct taxes, paid to the state by individuals on their taxable income. The taxpayer is any natural person who earns an income, whether they are an employee, a self-employed individual (entrepreneur), a landlord, an investor, or anyone else with income subject to taxation.
The subject of the tax is the sum of all partial tax bases from various types of income over one taxable period, which is typically the calendar year. The Income Tax Act categorizes these into five main groups: income from dependent activities (employment), income from self-employment (business), income from capital (e.g., interest, dividends), rental income, and other miscellaneous income. The Czech Republic has a progressive tax system with two rates: 15% and a higher rate of 23% applied to the portion of income that exceeds a high-income threshold.
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