Leasing Your Home as an s.r.o. Office: Rent, Utilities and Tax Compliance

29.5.2026 | ARROWS law firm

Placing an s.r.o.’s registered office or a luxury office in a private family house is a smart step toward optimizing the company’s cash flow. However, it also brings complex tax issues regarding how to set up the lease agreement and the lawful transfer of energy costs into the accounting records. This article will guide you in detail through the procedures for safely paying yourself market rent and claiming legitimate business expenses.

The photograph shows a specialist addressing the tax structuring of leasing a registered office in a building.

Company registered office in your own house: Legal basics and types of agreements
Conflict of interest: A managing director leases property to their own s.r.o.
Arm’s length prices: How to determine rent safely
Taxation of rent on the individual’s side
Recharging utilities: Electricity, gas and water as tax-deductible costs
Office fit-out, repairs and technical improvements to the house
Real estate tax and VAT implications
How to build a defence file for the tax authority

Key takeaways

Market rent (transfer pricing): A lease agreement between you as an individual and your s.r.o. must be agreed strictly at an arm’s length market price.
Tax advantage for the owner: Rental income is taxed at 15% for an individual, is not subject to social security or health insurance contributions, and a 30% flat-rate expense deduction can be applied.
Allocation of utilities: Electricity, gas or water costs cannot be transferred to the company on a lump-sum basis, but only based on an exact allocation key (e.g., by the ratio of floor area).
Improvements to private property: If the company pays for a new roof or façade of your house, the tax authority will assess it as your non-cash taxable income.
Higher real estate tax: Setting aside part of a family house for business use entails an obligation to file a new return and pay a higher real estate tax rate in the Czech Republic.

Company registered office in your own house: Legal basics and types of agreements

Having the registered office of your own company in a family house is a completely common and lawful practice in 2026. The Czech legal system does not prohibit it in any way. To register the house address as the registered office in the Commercial Register, you only need the property owner’s written consent with an officially certified signature.

However, the consent to the registered office itself does not address the most important issue – the economic relationship between you and the company. If the s.r.o. actually uses the house (you have a fully equipped office, warehouse or archive there), you must support this arrangement with an appropriate agreement. In principle, you have two options.

The first option is a gratuitous loan-for-use agreement. You provide part of the house to your s.r.o. for use free of charge. As an individual, you do not receive any taxable income from this relationship. At the same time, however, the company logically cannot claim any rent as a tax-deductible expense.

The second option, and in practice the far more commonly used one, is a standard lease agreement. To set up a lease agreement correctly between you as an individual and your s.r.o. (including defining the premises and linking this to the tax implications), legal support in the area of real estate law is often helpful. As the owner of the house, you lease a specifically defined part of the property to your s.r.o. The company obtains a fully tax-deductible expense that reduces its tax base by 21%, and you obtain private income on which you do not pay social security or health insurance contributions.

Conflict of interest: A managing director leases property to their own s.r.o.

When, as an individual, you sign a lease agreement with a company in which you are also the sole managing director, an obvious conflict of interest arises. In similar situations, it is advisable to review the corporate documentation and procedures as well (consents, sole shareholder resolutions, minutes), which falls within corporate law, holdings and structures. You are effectively sitting on both sides of the negotiating table. The Czech Business Corporations Act addresses these situations with very strict rules.

The fundamental requirement is transparency. If your s.r.o. has multiple shareholders, you must inform them in advance of the intention to conclude such an agreement. The general meeting must approve the conclusion of the lease agreement between the managing director and the company; otherwise, the agreement could be challenged as invalid.

If you are the sole shareholder and also the sole managing director, you obviously do not need to convene a general meeting. However, a sole shareholder’s resolution adopted in the scope of the general meeting’s powers must be in writing.

The lease agreement itself between you and your s.r.o. must always be in writing. The signatures do not have to be officially certified, but we at ARROWS advokátní kancelář (office@arws.cz) strongly recommend it to clients. A certified signature is conclusive proof of the signing date in the event of a potential audit by the Czech tax authority.

Arm’s length prices: How to determine rent safely

The biggest tax trap when leasing your own house to your s.r.o. is the rent amount itself. The relationship between you and your company is a relationship of so-called related parties. The practical impact of related-party rules on a company’s day-to-day operations (including supporting documentation for a tax audit defence) is also discussed in the new article Invoicing between a shareholder and their own company: Legal and tax risks that can jeopardise a business. Under Section 23(7) of the Czech Income Taxes Act, the price in such a relationship must be agreed at arm’s length (transfer pricing).

In plain terms: You must charge the company exactly the same rent you would charge a complete stranger under the same conditions. You cannot charge CZK 50,000 per month for one small office room just to extract untaxed money from the company. The Czech tax authority would immediately assess additional tax on the difference from the market price.

Likewise, you cannot agree rent that is suspiciously low (e.g., CZK 100 per month) if you want the company to pay for extensive repairs or to fit out the office at significant cost. Any deviation from the usual market price must be something you can rationally and economically justify to the authorities.

The best way to determine a safe rent level is to prepare a benchmarking (comparability) analysis. In 2026, open real estate portals and find listings for commercial office rentals in your city or region with comparable size and quality.

Take screenshots of these listings, calculate the average price per square metre, and use that as the basis when signing your agreement. Store this documentation carefully in the company archive. It is your key shield in the event of a tax audit, as it will unequivocally demonstrate the arm’s-length level of the price to the officials.

Taxation of rent on the individual’s side

Once you start transferring the agreed rent from the company to your private bank account, you become a recipient of taxable income under Section 9 of the Czech Income Taxes Act (rental income). You must report this income in your annual personal income tax return.

A major advantage of rental income is that, as an individual, you do not pay social security or health insurance contributions on it. This makes leasing one of the most efficient ways to legally move funds from your company into your private sphere.

For tax purposes, you can choose how to claim expenses. You can keep records of actual expenses associated with the leased part of the house (depreciation of the proportional part of the property, insurance, mortgage interest). However, this is administratively demanding and closely scrutinised by the authorities.

A much simpler and safer route is to use the flat-rate expense allowance. For rental income, in 2026 you are entitled to apply a flat-rate allowance of 30% of total income (subject to the statutory cap). In practice, you therefore tax only 70% of the rent received, at the standard personal income tax rate.

Recharging utilities: Electricity, gas and water as tax-deductible costs

Having a home office means that when working for the company you consume electricity, heat with gas and use water. These costs are legitimate business expenses. However, you cannot simply take the payment slip for the entire family house and reimburse it from the company account. The Czech tax authority would immediately classify it as a non-deductible expense.

The key is to find a fair and defensible allocation method. The cleanest solution is to install sub-meters (electricity meter, gas meter, water meter) specifically for the leased part of the house. However, few people are willing to make such construction interventions in the existing electrical installation of a family house.

In practice, the most common approach is therefore a proportional calculation. You calculate the total floor area of your house and determine how many square metres are taken up by the leased company office (including a proportional share of shared areas such as a hallway or toilet).

If the office takes up exactly 15% of the total area of the house, you can safely pass 15% of all advance payments and final settlements for heating and electricity on to your company. This allocation key must be specified precisely in the lease agreement.

The company will not pay you for these utilities as part of the rent, but as a separate item (service charge settlement). Keep all original invoices from utility suppliers. Your company will book as an expense only your internal “recharge”, supported precisely by the relevant share of those main invoices.

Furnishing the home office, repairs and technical improvement of the house

You have a home office leased to your company, you have transferred utilities, and now you want to furnish the office using company funds. Purchasing premium office furniture, computers, monitors, an ergonomic chair or a printer for the leased space is a fully tax-deductible company expense under Czech law.

Although these items are physically located in your family house, in terms of ownership and accounting they belong exclusively to your company. You must properly record them in the company’s asset register. If the company were to cease operations one day, these assets would have to be sold or disposed of; they do not automatically remain with you free of charge.

The situation becomes more complex with construction works. Ordinary maintenance (painting the office, replacing a burnt-out light bulb, or changing a broken door lock) can normally be paid by the company—just as it would be in any third-party leased commercial premises.

The fundamental issue arises with technical improvement. If the company pays for a new floating floor, built-in air conditioning or new windows, it increases the value of your private property. Under the Czech Income Taxes Act, this constitutes non-monetary taxable income for you as the owner of the house, which you must report in your personal tax return.

This harsh taxation can only be avoided if the owner (you as an individual) gives written consent to the technical improvement and you agree that the technical improvement will be depreciated directly by your s.r.o. in its accounting. However, this is a complex procedure requiring professional care.

Spouse’s consent (SJM) and a mortgage

When arranging a lease between you and your company, you must not forget family law. If you acquired the family house during the marriage, it will most likely fall under the spouses’ community property (SJM). You are therefore not its sole owner.

To enter into a lease agreement for part of a house that forms part of SJM, the consent of the other spouse is required under the Czech Civil Code, unless it is an ordinary matter. Leasing for your company’s commercial purposes is often not considered an ordinary matter.

We therefore recommend that the lease agreement with your company is always formally signed by both spouses, or that the other spouse adds a clause to the agreement with their explicit written consent. This will help you avoid the risk that the agreement could be challenged as invalid in the future (e.g., in the event of divorce).

As already mentioned, you should also be careful with banks. If the house is subject to a mortgage taken out for housing purposes, some banks prohibit commercial leasing or make it conditional on consent and a possible adjustment of the interest rate. Always review your loan terms in advance.

Real estate tax and VAT implications

The last major tax trap that entrepreneurs often forget about is real estate tax. Family houses used for housing have very low tax rates. However, once you lease part of the house for business purposes (as an office for your s.r.o.), the purpose of use of that specific floor area changes.

As the property owner, you are obliged to file a new (partial) real estate tax return by the end of January of the following year. In it, you must state how many square metres of your house are used for business. You will pay a significantly higher commercial tax rate on those square metres.

Another factor is value added tax. From a VAT perspective, the lease of real estate is generally an exempt supply without the right to deduct input VAT. If you are not a VAT payer as an individual (which you typically are not for ordinary rental income), you simply charge the rent to the company without VAT.

However, if as an individual you exceed the turnover threshold for mandatory VAT registration (in 2026 the limit is CZK 2 million) from other economic activities, the lease could become more complicated. The expert advisors at ARROWS, a Prague-based law firm (office@arws.cz), will help you structure the agreements so that you do not inadvertently become a VAT payer.

How to build a defense file for the tax authority

The burden of proof when defending any company expenses always lies with you. In a potential audit, the tax authority will automatically assume that leasing your own house to your s.r.o. is used to unlawfully reduce the tax base. Your task is to prove the opposite.

It is critically important to build, already when signing the agreement, a so-called defense file (Defense File). It should physically contain a valid and signed lease agreement (ideally with notarised signatures) and a resolution of the general meeting or the sole shareholder approving this step.

A key part of the file is a floor plan of your family house, with the areas leased to the company highlighted in colour and precisely measured. Attach a detailed mathematical calculation of the percentage share you use to allocate heating and electricity costs.

Do not forget to attach a printed comparative analysis of market rent from real estate portals (screenshots of listings valid as of the date of signing the agreement) and photographs of the fully equipped company office. With this precise approach, you leave tax inspectors no room for speculation and your expenses will remain untouched.

Final summary

Having the registered office of your own s.r.o. in a private family house is a highly effective tool for optimising your finances. It allows you to transfer funds from the company to your private pocket fully legally without heavy social security and health insurance contributions, while also including part of your energy bills in the company’s expenses.

However, this benefit requires uncompromising compliance with the rules of the game. Every lease agreement between you and your company must reflect strict market conditions (transfer pricing). If you do not provide the authorities with an accurate floor plan, a logical key for re-invoicing utilities, and a price analysis, your tax saving will quickly turn into crippling additional assessments. Do not risk unnecessary conflicts with the state authorities and have the entire structure set up by professionals.

Legal and tax experts from ARROWS advokátní kancelář will prepare watertight lease agreements for you, review utility allocations, and protect you from penalties in 2026. Contact us with confidence today at office@arws.cz and run your business from home in complete safety.

FAQ – Most frequently asked questions

1. Is the 30% flat-rate expense deduction, or actual expenses, more advantageous for rental income?
For the vast majority of family house owners, the 30% flat-rate expense deduction is far more advantageous and safer in 2026. It does not require you to collect receipts or prove whether something was a repair or a technical improvement. It is easy to apply and minimises the risk of errors in your tax return.

2. Does the company office in a family house have to have a separate entrance from the street?
No, Czech law does not require a separate entrance for the registered office and office premises. It is perfectly fine if you access an upstairs office through a private vestibule or hallway. However, the lease agreement should address the company’s right to use these common areas for access.

3. Can I include insurance for the family house in the company’s expenses?
Insurance of the family house building itself should be paid by its owner, i.e., you as an individual. However, your company can (and should) arrange its own commercial insurance for company equipment, inventory, and technology located in the leased office.

4. What if the tax authority says that the rent I set is unnecessarily high?
If the tax authority proves that the rent is higher than the usual price at the given place and time, it will disallow the difference from your company’s tax-deductible expenses and assess additional 21% corporate income tax. For you as an individual, it will then reclassify that difference as a hidden dividend distribution and subject it to additional withholding tax. With our assistance and defence, you can avoid this (office@arws.cz).

5. Can the company be charged for cleaning services if my wife cleans the office?
If your wife does not have her own trade licence (IČO) for cleaning services, she cannot officially invoice these services to the company. Any money for cleaning within the family must be handled privately. If the cleaning were performed by an external agency, it is a standard tax-deductible expense for an s.r.o.

6. Can I have the company pay for the house’s year-round water consumption if I only work on a PC?
Absolutely not. Utility allocations must reflect common sense. While electricity and gas consumption increases proportionally due to heating and running a PC in the office, water consumption in ordinary office work is marginal. Claiming a percentage share of, for example, a swimming pool or garden watering is completely indefensible before the tax office.

Notice: The information contained in this article is of a general informational nature only and is intended for basic orientation on the topic under the legal framework as of 2026. Although we take maximum care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client safety we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of information from this article without prior individual legal consultation.

Read also:

Tax risks when your registered office is at home	How ARROWS helps (office@arws.cz)
Challenging market rent: The tax authority will challenge an inflated rent and assess you withholding tax as if it were a dividend.	We will prepare a precise comparative analysis of market prices in your area that will reliably withstand an audit.
Disallowance of energy costs: Inspectors will not like an estimated flat rate for electricity consumption.	We will prepare a lease agreement with a precise, watertight mathematical allocation key for lawful apportionment.
Conflict with the Business Corporations Act: An invalid agreement due to missing approval by the general meeting.	We will prepare complete corporate documentation and a sole shareholder’s resolution to legalise the agreement.
Taxation of improved property: The company paid for a new floor, which the authority will classify as your personal income.	We will advise you on what can be recognised as a standard company repair, and what already constitutes risky technical improvement of the house.
Issues with community property (SJM) and a mortgage: Your spouse did not consent to the lease; the bank threatens sanctions for commercial use.	We will structure the contractual relationships with regard to the spouses’ community property regime and review your loan agreement.