Tax News 2025
The 2025 tax changes affected VAT, mandatory registration and the taxation of certain income from asset disposals. For example, a company that leaves an invoice unpaid beyond the statutory period may be required to adjust its VAT deduction under the applicable conditions. The article also explains turnover thresholds, corrections to the taxable amount and property-sale rules, helping businesses plan their tax and accounting procedures.
1. VAT Deduction: New Limits and Risks
Imagine a situation where your key supplier still expects payment from you, but you are already dealing with returning VAT to the tax office. Such a scenario can significantly affect the financial stability of the business. Proactive payment planning and consistent monitoring of invoice due dates are now a necessity.
If the invoice is paid later, the entitlement to the deduction can be claimed again. However, the associated administrative burden can be time-consuming and requires precise record-keeping.
2. VAT Registration: Two Thresholds and a New Calculation Method
New thresholds for mandatory VAT registration can bring unexpected complications for entrepreneurs. While the annual turnover threshold of CZK 2 million remains unchanged, the introduction of a second threshold (CZK 2.536 million) for immediate registration adds complexity.
For example, a company that exceeds the CZK 2 million limit in October will only become a VAT payer from January of the following year. However, if it exceeds the threshold of CZK 2.536 million, it becomes a VAT payer immediately. This difference requires careful turnover management and planning for the acceptance of new orders.
Remember that an incorrect calculation or delayed registration can lead not only to high penalties but also to a loss of business trust.
3. Taxation of Extraordinary Income: New Exemption Limit
The sale of securities or shares will no longer be as advantageous as before. The introduction of a CZK 40 million cap on income tax exemption forces investors and entrepreneurs to rethink their strategies.
For example, if you plan to sell shares with a yield of CZK 50 million, the amount exceeding CZK 40 million will be taxed at the standard personal income tax rate. This step can affect decisions on selling shares or reorganizing asset structures.
We recommend consulting with our Czech legal team and tax experts in a timely manner so that you can optimize your investments and minimize tax impacts.
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4. Real Estate: End of the Five-Year Test
One of the key changes is the abolition of the five-year time test for VAT exemption on the sale of real estate. Under Czech legislation, only the first sale of real estate within two years of the completion of construction or its substantial modification will be taxed. This change simplifies the rules but brings new challenges.
For example, if you sell an apartment two years after its renovation, this sale is subject to VAT. The advantage for suppliers is the option to choose taxation even for exempt transactions. This choice can be beneficial if you want to claim a VAT deduction for construction or renovation.
Entrepreneurs should carefully consider whether taxation is beneficial for them. Consultation with tax advisors can reveal hidden opportunities and risks.
5. Adjustments to the Tax Base
The new seven-year period for adjustments to the tax base is a fundamental change that can make VAT management easier for entrepreneurs. The period also applies to entities that are no longer VAT payers, which expands the possibilities for managing historical receivables.
A simplified procedure is introduced for receivables up to CZK 10,000 including VAT. If the receivable is six months overdue and the debtor has been requested in writing to pay at least twice, an adjustment to the tax base can be made using a corrective tax document. However, this tool is limited by a total cap of CZK 20,000 per debtor.
Practical advice: Keep careful records of bad debts and payment reminders. Faulty documentation can lead to problems during a tax office audit.
6. Taxation of Extraordinary Income: Impact on Your Investments
As of 1 January 2025, the rules for exempting income from the sale of securities and shares are changing. The new limit of CZK 40 million per tax period can have a major impact on investment strategies.
For example, if you sell shares in a company for CZK 60 million, the income (not profit) exceeding CZK 40 million will not be exempt and will be taxed at the personal income tax rate. This change motivates thorough planning of asset sales to minimize the tax impact.
Tip: Speak with your tax advisor to find an effective way to optimize taxes on extraordinary income.
New rules for VAT, real estate sales, and income taxation are changing the environment in which entrepreneurs and investors operate. Do not wait to be caught unprepared – plan the necessary steps in time. Contact our Prague-based Czech legal team and specialists, who will help you adapt to the new rules and ensure you have full control over your finances. Call us today!
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Disclaimer:
The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 350,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (consultation@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.