TAX Flash

Please note that on 18 September 2020, the President signed a bill repealing, among other things, the senate's statutory measure No. 340/2013 Coll., and related legislation, on the acquisition of real estate taxes. This leads to an end to the flat-rate tax on the acquisition of immovable property in the Czech Republic, retroactively to 1 December 2019, for all entries of real estate transfers registered in the real estate cadastre, i.e. for those entries whose obligation to file a tax return for acquiring immovable property and for the buyer to pay acquisition tax arose on 31 March 2020 and later.

The bill also includes an amendment to Act No. 586/1992 Coll., on income taxes, as amended, through which two major changes in the area of personal income tax have been introduced, including:

  1.  A 50 percent reduction (from the current CZK 300,000 to CZK 150,000 for the tax period) in the maximum tax deduction on interest paid for mortgage loans to arrange for own housing needs, provided they were procured for this purpose from 1 January 2021. The original proposal envisaged the complete abolition of this tax relief. For interest paid on older mortgage loans procured until 31 January 2020, the limit of CZK 300,000 remains.
  2. An extension of the time test from five years to 10 for a tax exemption on income from the sale of immovable property not intended for own residence, for immovable property acquired from 1 January 2021. The five-year time test remains for such immovable property acquired before 31 January 2020