Î
Change of ownership
•
Generally, no right of contracting party to terminate the lease
only because of a transfer of the ownership to a real estate.
•
Lease to be distinguished from usufructuary lease (in Czech:
pacht) as a new legal institute introduced by the New Civil
Code.
TaX
Î
Direct acquisition of a property
•
Real estate transfer tax must be paid on the transfer of title
to real estate 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 adminis-
trative value calculated in accordance with the respective tax
laws). The seller is liable to pay the real estate transfer 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 estate transfer tax is payable by the end of
the third month following the month when registration of the
transfer was made in the Land Registry. An exemption from
the duty to pay real estate transfer 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 has been issued. To the contrary, a contri-
bution of real estate into a company’s share capital is subject
to tax from 2014.
•
From 2014, the transfer of a built-on plot is only tax-exempt
(VAT) if the building situated thereon complies with the 5-year
statutory period. This has a significant impact e.g. on the sale
of newly-built houses and apartments, where the transfer of
plot is now subject to VAT (21 % or 15 %). Tax exemption for
the transfer of buildings applies on compliance with the 5-year
statutory period (otherwise taxed at 21 % or 15 % for family
houses and residential buildings of a limited size).
Î
acquisition of shares in a company holding a
property
•
Upon their acquisition, the shares of a real estate company
are not subject to real estate transfer tax. No value added tax
(VAT) or capital duty is payable on shares 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 right to tax under the most of tax
treaties (except for e.g. Germany).
•
Capital gains derived by EU/EEA parent companies may also
qualify for 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 qua-
lify for tax exemption, if they are held for more than 5 conse-
cutive 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 requi-
rements apply to former acquisitions of shares).
Investor Guide to Europe 2014
| 17
Î
Right of
Construction
•
As for the right of construction,
tax exemption only applies if this right
includes a building that has complied with
the statutory period (otherwise taxed at 21 %).
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.
