Immovable property
Last reviewed 07 Dec 2023
Tax depreciation
Straight-line or declining balance over the expected legal useful life of the asset
Immovable property is allocated to the 5th or 6th depreciation category. Depreciation over a period of 30 or 50 years.
Straight-line
Over the expected legal useful life of the asset (Immovable property is allocated to the 5th or 6th depreciation category. Depreciation over a period of 30 or 50 years.),
tax-deductible provisions under special legal regulation (conditional on tying up funds): provision on repairs of tangible assets, provisions on natural resources (e.g. forest, land affected by mining, pond desilting)
Additional
not possible
Depreciation categories
Land
no depreciation
Buildings
Factories, warehouses etc.: 30 years
Office buildings, department stores, business centers, hotels, etc.: 50 years
Tax base for buildings
Allocation to a single category based on predominant use
Special depreciation
Tenants and other users (e.g. subtenants) who make structural improvements (subsequent acquisition costs) to rented assets may depreciate the cost of improvements (depreciation 30 or 50 years according to the method of classification of the building).
Structural improvements to historic monuments can be written down over 15 years.
Write-ups
Not allowable
Real estate income tax
Object of taxation
Gains from the sale of property is taxed by individuals if no exemptions is applicable.
Tax rate
Progressive income tax rates of 15% and 23% (as above)
Tax collection
By taxpayer through the annual tax return
Exemptions
Income from sale or property is tax free if
- property used for own permanenet living at least 2 years before its sale, or
- property is owned by the taxpayer at least 10 years before sale.
Property transfer tax
Objects of taxation
N/A
Basis of assessment
N/A
Tax rate
N/A
Property tax
Object of taxation
Land
- Agricultural land: 0.45 % or 1.35 % of the price per m2
- Paved area of land CZK 1.80 or 9 (EUR 0.0718 or 0.3591) per m2
- Development land CZK 3.50 (EUR 0.1397) per m2 Developed land CZK 0.35 (EUR 0.0140) per m2
The amounts provided by statute are indicative, and are increased by different coefficients in each municipality.
Buildings - buildings, constructions and units (apartments and commercial premises)
- Agricultural buildings and units: CZK 3.50 per m2 (EUR 0.1397)
- Industrial buildings and units: CZK 18 per m2 (EUR 0.7183)
- Office buildings and units: CZK 18 per m2 (EUR 0.7183)
- An additional CZK 1.40 per m2 (EUR 0.0559) is levied for each additional floor
Inflation coefficient for the tax period 2025 is 1; an inflation coefficient will be applied with maximum annual increase of 20 %.
Each municipality may also establish local coefficients of 0.5 to 5 for all land (except agricultural land) and buildings within its boundaries. For agricultural lands each municipality may establish local coefficients of 0.5 to 1.5 with effect on property tax from 2025 onwards.
The taxpayer’s total tax liability is then multiplied by the applicable coefficient (for individual types of land and buildings). Each municipality may also exempt land and buildings within its boundaries in favored industrial zones (this applies for the companies, which received the Decision on the Covenant of Investment Incentives).
Real estate funds
Both public real estate fund and special real estate fund can be set up under the Act on Investment Companies and Investment Funds.
Real estate fund must comply with specific investment limits and restrictions which depend on the fund form and fund investment strategy.
Special funds for qualified investors can be established, among other forms, in the form of corporations (public limited liability companies, SICAV, SICAF) or mutual funds (with no legal personality).
Such funds are subject to liberal statutory regulations – the nature of fund assets, the debt financing ratio, and risk management policies can as a general rule be freely determined in the funds’ articles of incorporation, subject always to appropriate diversification of fund assets. Mutual real estate funds have no legal personality of their own. Fund assets are managed as special assets of a capital investment company (investiční společnost) in the investment company's name but for the account of the mutual fund.
SICAV has its own legal personality; it invests in its own name and for its own account. It can generate sub-funds having each its own investors and investment strategy
Funds’ shares are redeemable. Funds may acquire property directly or via property companies.
Extensive investor protection regulations apply (nature of fund assets, risk diversification, debt financing, liquidity).
Owner of the fund assets
The management company in case of unit trust; the fund itself in case of fund in form of a corporation.
Annual valuation
By an independent expert.
Borrowing
In accordance with the fund's statute, but maximum 100% of net assets.
Diversification of risk
Value of any individual property not to exceed 20% of total fund assets
value of any individual property company not to exceed 30% of total fund assets.
Tax liability
Certain funds, called “basic investment funds” in the income tax act, are subject to a special 5 % corporate income tax rate. Funds that do not fulfil the requirements for basic investment fund are taxed by standard income tax rate of 21 %.
The basic investment funds are:
1) investment funds whose shares are being publicly traded on European regulated market (provided further conditions are met, esp. that no corporate taxpayer owns more than 10 % share in the fund and that the fund does not perform activities regulated under the Czech Trade Licensing Act),
2) mutual funds,
3) investment funds and subfunds of the stock company with variable capital investing at least 90 % of their assets into selected financial instruments,
4) comparable foreign funds domiciled in EU/EEC.
Distributions by the fund to the shareholders are subject to deduction of tax at source at the standard rate of 15 % (35 % in specific cases). This may be reduced by DTA or exempt under the Czech implementation of the EU Parent Subsidiary Directive in certain cases.
For investment funds established in another state a special corporate income tax rate of 5 % applies if the basic investment funds criteria as above are met in a similar way. The funds that do not fulfil the requirements for basic investment fund are taxed by standard income tax rate of 21 %.
