23 / 132
TAX
Direct acquisition of a property
• Real property acquisition tax must be paid on the transfer of
title to the real property for consideration. The current tax
rate generally amounts to 4 % of the purchase price (provided
the purchase price including VAT, if applicable, is higher than
an administrative value calculated in accordance with the
respective tax laws). The seller is liable to pay real property
acquisition tax, with the buyer as a guarantor. From 2014, the
parties may agree that the buyer must pay the tax (the seller
is not a guarantor in this case).
• In general, real property acquisition tax is payable by the end
of the third month following the month when the registration
of the transfer was made in the Land Registry. An exemption
from the duty to pay real property acquisition tax is, inter alia,
allowed for the first transfer of a family house or an apartment
(including a plot of land), if occurred within 5 years from
the moment an occupancy approval had been issued. To the
contrary, a contribution of real property into a company’s
share capital is subject to tax since 2014.
• Since 2014, the transfer of a built-on plot is VAT-exempt
only if the building situated thereon complies with the 5-year
statutory period; however, the seller may opt for taxation even
after such 5-year period. This has a significant impact e.g.
on the sale of newly-built houses and apartments, where the
transfer of the built-on plot is now subject to VAT (21 % or
15 % for plots with family and residential buildings of a
limited size).
Acquisition of shares in a company holding a property
• Upon their acquisition, the shares of a real property company
are not subject to real property acquisition tax. No value
added tax (VAT) or capital duty is payable on share deals.
• At the sale of Czech shares, capital gains derived by non-
Czech tax residents are subject to income tax (of 15 % for
individuals and 19% for corporations), irrespective whether
the buyer of shares is a Czech resident or not. In addition,
the buyer is obliged to withhold a security tax of 10% upon
payment, if the purchase price is paid to non-EU/EEA
residents. The Czech Republic, however, loses the taxing right
under most of the tax treaties (except for e.g. with Germany).
• Capital gains derived by EU/EEA parent companies may
also qualify for a participation exemption if both the parent
company and the Czech subsidiary have the required legal
form and a shareholding of 10 % (of a share capital or voting
rights) is held for at least 12 months. Capital gains derived
by individuals qualify for a tax exemption, if participation has
been held for more than 5 consecutive years (in case of an
interest in a limited partnership or a limited liability company)
and 3 consecutive years (in case of shares acquired in a joint
stock company in 2014; other requirements apply to former
acquisitions of shares).
Right of construction
• As for the right of construction, a VAT exemption applies
only if this right includes a building that has complied with
the 5-year statutory period (otherwise taxed at 21% or 15% if
this right includes a family house or a residential building of a
limited size). However, the seller may opt for taxation. VAT is
paid by the buyer to the seller, and the seller must pay VAT to
the competent tax authority.
23
Investors Guide to Europe 2015