Czech property tax overview
This article gives an overview of the main taxes that a property owner would need to deal with in the Czech Republic.
Personal tax number
Property owners don’t need to register for a personal tax number
Properties must be registered for property tax.
Properties must be registered by 31st January in the year after purchase. Property tax is paid yearly to the relevant financial office where the property is located and is payable by May of each year. The amount payable varies depending on the size and location of the property, for a typical apartment in Prague it amounts to around 1,000 to 2,000 CZK/year.
Income tax on rents
Income tax is 15%.
An income tax return must be filed annually.
The tax year runs from 1st Jan to 31st Dec. Tax returns are due by 31st March the following year.
Costs can be deducted from incomes using two methods:
- Fixed rate costs – takes total income (up to a max of 300,000 CZK) and reducing this amount by a fixed 30% and the remainder is taxable no matter what the real costs.
- Income minus costs – takes total income and subtracts total costs. Example allowable costs are bills, management fees, mortgage interest and depreciation.
For properties owned via a Czech company, the current corporation tax rate is 19%.
There is a 15% tax on dividends.
General Sales Tax (VAT)
The current rate of Czech VAT is 21%. There is also a lower rate of VAT at 15%, which applies on some items.
Property purchase tax
The government charges 4% tax on the purchase price of a property to the buyer. The 4% tax is payable on the higher amount of either the sale price or the tax evaluation price. The valuation can be done either with an official valuer or by filling in the required forms with sufficient proof of the value.
Property sales tax
There is no longer a property sales tax in the Czech Republic. This has been replaced in 2016 by a purchase (transfer) tax.
Capital gains tax
Technically there is no such thing as capital gains tax in the Czech Republic. Any capital gains are treated as income which is taxed at 15%.
For non-residents, there is no capital gains tax on property if the property is held for five years or more.
For residents, the period is two years.
Czech property purchased through a company will attract 19% tax, however, this can be offset against the expenses of the company.