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Tax Policy and Philanthropy in the Czech Republic: The (Limited) Power of Tax Incentives

Author

Listed:
  • Kirschnerová Pavlína

    (Department of Finance and Accounting, Faculty of Management and Economics, Tomas Bata University in Zlin, Zlín, Czech Republic)

  • Janoušková Jana

    (Department of Finance and Accounting, Faculty of Business Administration at Silesian University, Karviná, Czech Republic)

  • Urbánek Tomáš

    (Department of Statistics and Quantitative Methods, Faculty of Management and Economics, Tomas Bata University in Zlin, Zlín, Czech Republic)

Abstract

Research on charitable deductions originates primarily from Western countries with a long tradition of philanthropy. Research is insufficient in post-communist countries, where philanthropy is a relatively young discipline. This study examines the impact of changes in Czech tax legislation on individual charitable giving. It focuses on adjustments to the conditions for applying charitable deductions and changes to tax rates. Using panel data from tax returns for 2005–2021 and questionnaire survey data, the research evaluates donors’ responses to tax incentives. The findings reveal that while charitable giving in the Czech Republic is sensitive to marginal tax rates, it is largely unresponsive to loosening conditions for charitable deductions. The study shows that higher taxable income correlates with increased charitable deductions, especially under progressive tax rates. However, the transition to a uniform tax rate reduced the effectiveness of charitable deductions despite a stabilization in giving trends over time. Increasing the limit for charitable deductions showed minimal impact on donation amounts. This was also reflected in the limited awareness and general indifference of donors toward tax benefits.

Suggested Citation

  • Kirschnerová Pavlína & Janoušková Jana & Urbánek Tomáš, 2026. "Tax Policy and Philanthropy in the Czech Republic: The (Limited) Power of Tax Incentives," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 36(2), pages 72-98.
    • Handle: RePEc:vrs:suvges:v:36:y:2026:i:2:p:72-98:n:1004
    DOI: 10.2478/sues-2026-0009
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    Keywords

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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