Legal and Tax Pitfalls for Czech Owners of Real Estate Abroad

Mgr. Vojtěch Sucharda
Mgr. Vojtěch Sucharda
10.3.2026 | ARROWS law firm

In this article, you will learn what legal and practical issues Czech owners of real estate abroad may face in Europe and beyond. We provide clear answers to questions related to renting out property, asset management, and local legislative requirements that often come as a surprise to Czech owners. You will also find out how to avoid these issues and who to contact if problems arise.

The photo shows an expert addressing legal issues faced by Czech owners of real estate abroad.

Quick summary

  • Legislative risks: Each country has entirely different regulations for property transfers, lease relationships, tax obligations, and registration requirements. Ignoring them can lead to substantial fines and legal disputes.
  • Remote property management: Managing assets abroad requires knowledge of local rules, protection against fraud, and contacts with reliable managers—something that often catches Czech owners off guard.
  • Tax and administrative obligations: Owning assets abroad entails tax obligations in the Czech Republic (taxation of worldwide income under Czech tax rules) as well as in the country where the property is located.
  • Risk of legal disputes: Lack of familiarity with the local legal framework (e.g., tenant protections in Spain or the USA) often leads to conflicts that are costly and time-consuming for Czech owners.

Why foreign real estate is risky for Czech owners

Buying property abroad sounds simple: you find an attractive offer, you pay, and you own an asset. In practice, however, it is significantly more complicated. Every country—whether Spain, Dubai, or the USA—has its own legal regulations that differ fundamentally from the Czech legal environment.

The issue is that Czech regulations do not apply beyond the borders of the Czech Republic, and likewise you cannot automatically apply Czech legal practice to a property in Madrid or Miami. The attorneys at ARROWS advokátní kancelář deal with Czech owners of foreign real estate and their issues on a daily basis.

What legal systems you can expect

Spain, Dubai, and the USA do not just have different laws—they have entirely different legal systems. Spain is part of the European Union, which brings a certain degree of harmonisation (e.g., in the recognition of judgments), but property law remains within national competence. Dubai (UAE) operates as an emirate with its own legal order, combining Sharia principles with modern commercial legislation.

The USA consists of fifty states, each with its own real estate legislation, and the risk lies in not realising which specific state statutes apply to your property.

The lawyers at ARROWS advokátní kancelář have long-standing experience in handling international matters. Thanks to the global ARROWS International network, they can provide expert legal advice and representation in these areas, including practical contacts with local authorities.

Surprises can arise already at the purchase stage

A major challenge is the purchase phase, because the Czech legal tradition relies on the Land Registry (Katastr nemovitostí) and the principle of material publicity, whereas abroad the process works differently. In Spain, purchasing real estate is a two-stage process, and the key step is registration in the Registro de la Propiedad (property register), which differs from the Catastro (tax/mapping cadastre).

In the USA, you need to address Title Insurance (insurance against defects in title), local registry entries (deed recording), and in Dubai there is a specific registration process with the Dubai Land Department (DLD) with its own rules.

If you do not prepare properly, you risk ending up with a property burdened by debts, liens, or hidden easements. Abroad, the level of your responsibility (caveat emptor) is often higher, and without qualified assistance you may incur significant financial losses.

Related questions on foreign real estate

1. What checks do I need to carry out before buying property abroad?
An absolutely essential step is a comprehensive legal analysis (due diligence) of ownership, checking for liens or legal disputes, verifying the seller’s identity, and validating all documents in the jurisdiction where the property is located. 

2. Who should handle the legal side of the purchase if I am not physically present in the country?
Common practice is to grant a power of attorney to a local lawyer, but ideally your interests should be coordinated by your Czech legal counsel, who understands your needs. The lawyers at ARROWS advokátní kancelář have a network of international partners and can arrange representation for you and prepare all relevant documentation from the Czech side.

3. What costs should I budget for in addition to the purchase price?
Transaction costs vary—Spain typically involves 10–12% on top of the purchase price (ITP transfer tax or VAT, notary, registration), in the USA you pay “closing costs”, and in Dubai you pay the DLD fee (usually 4% of the price). ARROWS lawyers will walk you through all costs and prepare a budget.

Renting out a property abroad – legislative pitfalls

Once you buy property abroad, you will often want to rent it out—whether for passive income or to ensure ongoing maintenance. However, renting is highly regulated in every country, and this is exactly where Czech owners are in for a number of surprises.

Spain: differences between autonomous communities

In Spain, long-term rentals are governed by the Urban Leases Act (Ley de Arrendamientos Urbanos - LAU), but regulation of short-term (tourist) rentals falls within the competence of the individual autonomous communities. The conditions for obtaining a tourist licence in Barcelona are therefore radically different from those in Alicante.

Specific issues include caps on rent levels in so-called “stressed zones”, mandatory registration of tourist rentals, compulsory insurance, and energy certificates. If you rent out a property without the relevant tourist licence or fail to submit the required tax filings, you may face substantial fines from the authorities.

USA: the state is the law—and it changes

In the USA, rental regulation is a matter of state and local government (Landlord-Tenant Law). If you own property in California, California laws apply to you and are very tenant-protective, whereas in Florida the legislation is more balanced.

A major challenge is rental management, which requires knowledge of the US legal system and procedures for enforcing rent payments. Breaching rules—such as unauthorised entry into the property—can lead to a damages claim.

Dubai: the Ejari system and obligations

In Dubai, specific rules apply to foreigners, and rentals are regulated by RERA (Real Estate Regulatory Agency). Registration of the lease agreement in the Ejari system is essential; without it, the lease is not legally enforceable.

ARROWS’ Prague-based law firm can provide a legal opinion tailored to your specific situation, the drafting and review of lease agreements, and advice reflecting the applicable local legislation. This also includes the specifics of short-term rentals (holiday homes), which require a licence from the DTCM.

Related questions on renting

1. How do I make sure the lease is legally enforceable?
The lease agreement must be prepared in compliance with local regulations (e.g., the LAU in Spain, Ejari registration in Dubai). ARROWS’ Prague-based law firm will arrange the drafting and review of lease agreements that protect your interests.

2. What tax obligations do I have from renting abroad?
Rental income earned abroad is usually taxed in the source country (abroad) and is then also reported in your Czech tax return (using double-taxation relief methods). 

3. What if the tenant has a claim against me for violating their rights?
Not knowing tenant rights in a particular country can lead to legal disputes. ARROWS’ Prague-based law firm participates in representation in legal disputes through partner attorneys in the relevant country.

Remote property management and maintenance

Owning property in Spain, Dubai, or the USA is one thing – managing and maintaining it is another. If you own a property that you rent out, you must ensure it is in good condition and meets all local safety and hygiene standards.

How to find a reliable property manager

Many Czech owners arrange rentals through a Property Management Company, but the quality of these firms varies. If you do not choose the right team, you risk unnecessary costs for fictitious maintenance, poor handling of income, and breaches of local regulations.

Protection against fraud

With remote management, you are vulnerable to fraud, where a manager may “forget” to forward rent or charge you for non-existent repairs. In some countries, legal enforcement of damages against such a manager is very difficult without a high-quality contract in place in advance (a Property Management Agreement).

What looks like a simple rental is, in reality, a complex legal relationship, and it is better to have control mechanisms set up from the outset. ARROWS’ Prague-based attorneys regularly handle cases where Czech owners discovered management issues only once significant damage had already occurred.

Local certificates and requirements

Each country has specific requirements for placing a property on the market. In the EU, for example, this includes an Energy Performance Certificate (EPC), while in Dubai service charges must be paid; otherwise, access to the property or services may be restricted.

Related questions on property management and maintenance

1. How do I choose a reliable property manager abroad when I am not physically present?
Always ask for references, verify the company in local commercial registers, and insist on a detailed management agreement. 

2. What if the manager steals my money or fails to perform their duties?
Legal enforcement against a manager requires knowledge of local law and strong evidence. ARROWS’ Prague-based law firm can handle negotiations with business partners and, if necessary, legal enforcement of damages.

3. What documents do I need to obtain from the manager to ensure everything is properly administered?
You must have access to all records – lease agreements, repair invoices, bank statements, and confirmations of tax payments. ARROWS’ Prague-based law firm will advise you on which documents to archive in case of a Czech tax audit.

Tax obligations – you cannot avoid the Czech tax authority

Many Czech owners mistakenly believe that if they buy property abroad, they only pay taxes there. However, as a tax resident of the Czech Republic, you are obliged to tax your worldwide income, including income from renting abroad.

Czech tax obligation

If you have tax domicile in the Czech Republic, you must file a Czech personal income tax return and report gross income from renting abroad. You must also claim expenses and prevent double taxation by applying the method set out in the relevant Double Taxation Treaty.

This requires knowledge not only of Czech legislation, but also of the applicable international treaty, to avoid incorrect taxation.

Tax obligations in the country where the property is located

In the country where the property is located, there is usually an obligation to register and pay non-resident income tax. In Spain, this is the IRNR tax; in the USA, a 1040-NR tax return is filed; and in Dubai it is necessary to monitor municipality fees.

If you do not address your tax obligations correctly, you risk penalties, late-payment interest, and in extreme cases even criminal liability for tax evasion.

Tax treaties and double taxation relief

The Czech Republic has tax treaties with Spain, the USA, and the United Arab Emirates that determine taxing rights. Incorrect application of the method (e.g., tax credit vs. exemption) may result in you paying unnecessarily too much, or conversely too little and exposing yourself to sanctions.

Related questions on tax obligations 

1. Do I have to file a tax return in the Czech Republic if I own property abroad?
If you are a Czech tax resident and have rental income, yes. This income forms part of your worldwide tax base.

2. Can I deduct the tax I paid abroad from my Czech taxes?
Yes, to the extent permitted by the relevant Double Taxation Treaty (most commonly using the ordinary tax credit method). For this, you must have proof of tax paid abroad.

3. What happens if I fail to meet my tax obligations abroad?
Foreign tax authorities now have effective enforcement tools (including international exchange of information). You face high fines and seizure of assets.

Specific examples: what can happen and when the problem arises

Imagine the situation of a Czech entrepreneur who bought an apartment in Barcelona for EUR 300,000 and rents it out “under the table” to tourists via Airbnb without a licence. After being reported by neighbours, he receives a fine of EUR 60,000 from the city, a ban on the activity, and in addition the Spanish tax authority assesses additional tax on his profits.

The second example concerns a Czech investor who bought a house in Florida, rents it out for two years, but does not file a US tax return because she relies on the property management company. When selling the property, she finds out that due to the FIRPTA rules the buyer must withhold up to 15% of the sale price as an advance tax payment, and she must retrospectively resolve all unfiled returns under threat of penalties.

ARROWS’ Prague-based attorneys handle such cases and know how to prevent them. That is precisely why it is better to secure expert advice at the very beginning, so that similar situations do not arise at all.

What risks a Czech owner may face

Risks and penalties

How ARROWS can help (office@arws.cz)

Legally defective property purchase: Buying without checking debts or encumbrances.

Legal due diligence: ARROWS will arrange an analysis of the property’s legal status and the relevant registers before any funds are transferred.

Fine for illegal letting: Renting without a licence (Spain) or without Ejari registration (Dubai).

Compliance and contracts: We will ensure the lease relationship complies with local regulations and prepare watertight agreements.

Additional tax assessments: Incorrect taxation in the Czech Republic or in the country where the property is located.

Tax advisory: We will help with applying double taxation treaties and filing tax returns.

Dispute with a tenant: Inability to evict a non-paying tenant due to errors in the contract.

Dispute resolution: Through local partners, we will arrange legal representation before local courts.

Fraud by a property manager: Misappropriation of rent or fictitious costs.

Partner vetting: We will verify the reliability of property management companies and set up control mechanisms.

International presence and cooperation options

If you own or plan to buy property in Spain, Dubai, or the USA, you should be aware that the right solution requires local expertise. The attorneys at ARROWS, a Prague-based law firm, have access to the ARROWS International network, which covers key regions.

This means you do not have to search for a lawyer in Barcelona or Miami yourself, because ARROWS, a Prague-based law firm, will arrange representation through its vetted partners. Coordination of the approach and ensuring that your interests are protected is handled by our Czech legal team, backed by high-level professional indemnity insurance.

Conclusion

Owning property abroad is an attractive investment, but it comes with complex legal and tax challenges. Lack of knowledge of local legislation—whether it is the Ley de Arrendamientos Urbanos, RERA regulations, or US statutes—leads to fines and losses.

If you want to save time and money, do not hesitate to contact office@arws.cz to request a consultation. ARROWS attorneys in Prague will provide you with comprehensive legal services.

FAQ – Most common legal questions regarding issues faced by Czech buyers with overseas property

1. Can I buy property abroad without a local lawyer?
Technically, it is possible, but from an attorney’s perspective we strongly do not recommend it. You risk buying a property with legal defects. 

2. What are the main differences in legal systems?
The Czech Republic and Spain have a continental system (civil law), but they differ in procedures. The USA and, in part, Dubai (DIFC) are based on Anglo-American law (common law), where precedents play a major role. Dubai’s civil law is influenced by Islamic law and the Egyptian code.

3. How much will property management cost me?
Management fees usually range between 8–20% of the rent depending on the country and the scope of services (short-term vs. long-term letting).

4. How do I ensure that my tax obligations do not result in a fine?
You must file returns in both countries and correctly apply the double taxation treaty. Tax advisors cooperating with ARROWS can assist you with this.

5. What should I do if I have an issue with my tenant abroad?
Contact your property manager. If communication fails, it is necessary to proceed legally under local laws.

6. Can ARROWS attorneys help me with representation before authorities abroad?
Yes, through the ARROWS International network we arrange communication with authorities and representation abroad.

Notice: The information contained in this article is of a general informational nature only and is intended for basic guidance. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. To verify the current wording of the regulations and their application to your specific situation, it is therefore necessary to contact ARROWS, a Prague-based law firm, directly (office@arws.cz). We accept no liability for any damages or complications arising from the independent use of the information in this article without our prior individual legal consultation and professional assessment. Each case requires a tailored solution, so please do not hesitate to contact us.

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