Green buildings in the Czech Republic

What is meant by a green building and what are the legal frameworks?

A green building (sometimes also referred to as a sustainable building or a low-energy building) is not a legally uniform term with a single definition. Rather, it is a set of criteria that a building may meet on different levels:

Energy performance – the most important legal criterion. It is measured in kWh/m² per year and is regulated by Act No. 406/2000 Coll., on Energy Management, in connection with European Directive (EU) 2024/1222 (the so-called EPBD recast, the new wording of the Energy Performance of Buildings Directive).

Building life cycle – certification systems such as BREEAM, LEED, or the Czech (less widespread) system assess a building from its design through construction to operation and demolition. These systems are not mandatory, but without them you will not access green financing (green bonds, ESG mortgages, etc.).

Legal framework in the Czech Republic: The energy performance of buildings is governed primarily by Act No. 406/2000 Coll., on Energy Management, and the implementing Decree No. 264/2020 Coll., on the Energy Performance of Buildings. From 2026, with the transposition of the new Directive (EU) 2024/1222, major changes and a tightening of existing standards will take place:

• New buildings have had to be nearly zero energy buildings (NZEB – Nearly Zero Energy Building) since 2021. With the transposition of the new directive, an even stricter zero-emission building standard (ZEB – Zero-Emission Building) will be introduced gradually from 2026/2028.
• Buildings undergoing a major renovation of an existing building (e.g., insulating the envelope, replacing the heating system) must improve their energy performance.
• Public buildings will be subject to specific requirements for renovation and for achieving the ZEB standard, with binding deadlines from 2028.

Our attorneys in Prague at ARROWS view this area as exceptionally high-risk – legislation is evolving very quickly and the interpretation of individual rules is not always consistent in practice. That is why you need a substantive advisor who will help you identify in time which obligations specifically apply to your project.

Obligations under EU and Czech law

If you are an investor or developer in the Czech Republic, you should be aware of the following obligations:

1. Energy Performance Certificate (PENB) and energy audit

Any building intended for sale or lease, as well as new buildings and buildings undergoing a major renovation, must have a valid Energy Performance Certificate (PENB). An energy audit is a deeper analysis aimed at identifying potential savings. Both the PENB and the audit must be prepared by an authorised person – an energy specialist – and must include specific technical parameters of the building, its energy class (A to G, where A is the best), and recommendations for improvement. Where these documents are being prepared alongside design-and-build obligations, it can help to coordinate responsibilities and contractual risk allocation under Development & Construction Law.

A common mistake: Many developers believe that an old certificate from before an energy refurbishment is sufficient. That is not true – as soon as a building undergoes a major renovation (e.g., reconstruction of the envelope or the heating system), the certificate must be updated. If you do not do so, the building may still be sold or leased, but the seller or landlord faces a fine and the buyer or tenant may claim damages or a price reduction. Similar allocation-of-risk issues can arise in transactions and leases, as discussed in Buying Property with a Tenant in Place: Key Lease Risks Under Czech Law.

2. New building = NZEB already now, ZEB in the foreseeable future

Czech legislation requires new buildings to meet the nearly zero energy building (NZEB) standard already since 2021. With the transposition of Directive (EU) 2024/1222, an even stricter zero-emission building (ZEB) standard is being introduced.

Under this directive:

• New buildings owned by public authorities must be zero-emission buildings from 1 January 2028.
• All other new buildings must be zero-emission buildings from 1 January 2030.
• However, Czech legislation may set even more ambitious national targets or earlier deadlines for certain categories of buildings, which is expected as part of the transposition already from 2026.

Practical impact: You cannot build “commercially cheap” buildings with weaker insulation and deep-set windows. You must invest in high-quality energy performance already at the design stage, otherwise you will not obtain a building permit or you will not be able to obtain final approval for use. If you do not clarify this with the designer and the site manager already at the tender stage, you may end up with a construction that cannot be legally completed and properly used.

3. Mandatory measures to reduce energy consumption during renovations

If you renovate an existing building and it qualifies as a so-called major renovation of an existing building (e.g., insulation, window replacement, intervention in the heating system), you must mandatorily improve its energy performance. The law defines what requirements such a renovated building must meet.

You cannot do without this if you want to maintain the building’s attractiveness and ensure its future financeability. In addition, Directive (EU) 2024/1222 introduces minimum energy performance standards (MEPS) for existing non-residential buildings with the aim of gradually renovating the worst-performing ones.

4. Renewable energy elements

Directive (EU) 2024/1222 introduces an obligation to install solar systems for new buildings and for buildings undergoing a major renovation. 

This obligation will be introduced gradually:

• from 31 December 2026 for all new public buildings and for existing public buildings undergoing major renovation,
• from 31 December 2027 for all new non-residential buildings and for existing non-residential buildings undergoing major renovation,
• from 31 December 2029 for all new residential buildings and for existing residential buildings undergoing major renovation.

Whereas the absence of these elements was not always previously sanctioned by legislation (except for meeting NZEB/ZEB), under the new legislation it becomes a direct obligation. In addition, banks prefer projects with renewable energy sources and offer more favourable financing.

Green building certifications and standards

Alongside legally binding obligations, there are a number of voluntary certification systems. Although they are not statutory, they have an enormous practical impact on financing and the commercial value of your building.

BREEAM (Building Research Establishment Environmental Assessment Method) – a UK standard with worldwide recognition. It assesses a building based on criteria including energy, water, health and indoor environmental quality, management, transport, materials, waste and innovation. The building receives a rating: Unclassified, Pass, Good, Very Good, Excellent or Outstanding.

LEED (Leadership in Energy and Environmental Design) – a US standard with certificates ranging from 40 to 110 points. It is more popular in the USA, but it is also expanding in Europe. Ratings: Certified, Silver, Gold, Platinum.

Although green building certification is not mandatory, banks may discriminate against you, and mortgage providers now actively support only certified buildings through lower interest rates. 

If you have the building certified only after completion, it will achieve worse results and will be significantly more expensive than if you design it with certification in mind from the very beginning.

The attorneys at ARROWS are aware that certification processes are complex and require coordination with the designer, site manager, auditors and certification bodies. If you want to be sure the process is handled correctly, you should seek advice early—rather than only once problems arise.

Specific requirements for investors

Energy performance – what you must meet in practice

If you are building or renovating, here are the specific rules and deadlines you need to know:

Money and penalties

If you construct a building that does not meet the ZEB/NZEB requirements, the building authority may stop the construction and refuse to issue the final approval (occupancy permit). A legal entity or a self-employed individual may face a fine of up to CZK 5,000,000 under the Energy Management Act.

If you sell or lease a building without a current Energy Performance Certificate, you may face a fine of up to CZK 200,000 (for legal entities and entrepreneurs) or CZK 100,000 (for individuals), and the buyer or tenant may additionally seek a discount on the price or termination of the contract.

Other regulatory obligations

EU Taxonomy – a set of criteria determining whether your building is “sustainable” under EU law (Regulation (EU) 2020/852).

If you want access to green financing or EU funds, your building must meet these criteria. If you are unsure, at ARROWS we have Prague-based attorneys who can advise you on applying the taxonomy to your specific project.

Declaration of Performance – if you are constructing a building, it is necessary to ensure that all construction products meet the requirements of Regulation (EU) No. 305/2011 (CPR) and have a Declaration of Performance (DoP) issued. This is essential to ensure the quality and safety of the building.

Water and waste – in addition to energy, green construction also assesses water consumption and waste management. Some certification systems have strict requirements for rainwater harvesting systems, recycling of construction materials, etc. Even without certification, there are legislative requirements for water and waste management.

Practical risks and the most common mistakes in projects

Risks that investors often underestimate

• Error in the energy audit / PENB
  An energy specialist measures or calculates the energy performance incorrectly. The building then fails to meet the required standards (e.g., ZEB), even though it was assumed it would. Consequence: Your building permit will be refused or made conditional, the occupancy approval will be delayed, your mortgage will fall through, and the project becomes difficult to implement without major additional costs.
• Delayed green building certification
  Many developers think they will order certification (BREEAM, LEED) only after construction is completed. Mistake. The certifier then finds dozens of deficiencies that are very expensive to fix in a building that is already standing. Certification should be addressed in the project design and throughout its implementation, not ex post.
• Financing issues without certification

The bank will block your mortgage loan because the building does not have a green building certification. This also blocks your tenant’s or buyer’s access to favourable financing. Reality: Without a recognised green building certification, it is now practically impossible to obtain advantageous “green” financing, and the property loses market value.

• Cross-border projects
  If you build for foreign clients, they rarely realise that legal requirements for green buildings differ from country to country. A building that meets Czech requirements may not meet German or Austrian requirements.If ARROWS, a Prague-based law firm with a cross-border dimension to the project, does not assist you, you risk legal disputes and having to refund money.

Financing green buildings – legal aspects

Legal framework for sustainable finance and the EU Taxonomy

The EU and the Czech National Bank now support the financing of green projects through so-called sustainable finance (green bonds, green mortgages, ESG funds).

For your project to qualify for these products, it must meet the criteria of the EU Taxonomy (Regulation (EU) 2020/852). This means the lender will retain the right to audit your building and verify that all promised energy parameters are real. If you provide false information or the parameters are not met, you face repayment, penalty interest, and a legal dispute.

Contracts with the site manager and subcontractors

If you place emphasis on energy performance and sustainability in the project, this must be clearly defined in the scope of works and in the contract with the contractor. A common mistake: The contract is silent on the obligation of energy efficiency. The contractor then builds “normally”, regardless of green standards.

ARROWS attorneys in Prague are aware that construction contracts with energy-related obligations must be specifically tailored. We will help you prepare a contract that protects your interests and clearly defines the obligations of all parties.

Summary

Green buildings in the Czech Republic are not a luxury – they are legally mandatory standards that will become even stricter in the coming years. If you are an investor, developer or property owner and you do not meet energy obligations (ZEB for new buildings, energy performance certificates and audits), you face financial penalties, blocked transactions, inability to obtain favourable financing, and legal disputes.

Seemingly simple steps (ordering an audit, collecting data for certification, preparing an energy performance certificate) conceal many procedural details, legal dependencies and risks. Common mistakes in this process cost projects hundreds of thousands to millions of Czech crowns and can cause delays, or even result in you not completing the construction or obtaining occupancy approval at all.

If you want to be sure that your project will meet all legal requirements for green buildings without surprises and fines, entrust the matter to the lawyers at ARROWS, a Prague-based law firm. 

We will help you review your project’s energy obligations, coordinate with energy specialists and contractors, prepare certification documents, negotiate with banks on financing, and, if necessary, defend you in dealings with authorities. Contact us at consultation@arws.cz.

Read also:

• Managing Czech building permits: Avoid delays and protect your investment
• Integrated Permits in the Czech Republic: Process, BAT and IED 2.0 Changes
• When Smaller Czech Construction Projects Trigger Mandatory EIA
• Legal Support for Development Projects in the Czech Republic: Key Risks
• Liability for Poor Construction Briefs Under Czech Civil Code