Property Tax in the Czech Republic - When and How to File
Understand what the so-called immovable property tax (“real estate tax”) in the Czech Republic entails, including when and how to file.
What is the property tax in the Czech Republic?
In the Czech Republic, Property tax (previously “real estate tax”) is a collective term for two different types of taxes. These include:
- land tax, and
- tax on buildings or units.
Formally, this is the so-called tax on immovable property. It is different from the Czech rental income tax. Rental income tax entails tax obligations for owners of income generating real estate. It is part of the personal income tax, although with its own tax reporting rules.
Property tax accounts for taxable revenue on immovable property (land, buildings, units) on Czech territory and registered in the real estate cadastre. The land and building/unit taxes are calculated separately, and paid to municipalities through the administration of state tax authorities.
Read below for a simple explanation of property tax in the Czech Republic. We share the types of property tax, who has to pay, how to calculate taxes, and when / how to file.
Types of property subject to tax in the Czech Republic
Did you buy, sell, or inherit land, a house, or an apartment last year? If yes, there are new obligations related to the property tax in the Czech Republic.
For one, land tax and building / unit tax are separate. The money from these taxes supports the budget of municipalities and regions. For example:
- Tax on buildings and units most often applies to apartments and houses. Regions and municipalities calculate this tax according to property size and its valid real estate coefficient.
- Land tax mainly applies to real estate tax on a house, apartment, non-residential apartment (e.g. office), or a building lot (land).
Municipalities levy taxes annually on different types of privately-owned real estate and heritage. Further, as of 2014, inheritance and gift tax now fall under the Czech personal income tax.
This means property from inheritance is subject to progressive taxation as “other types of personal income.” However, there are various exemptions that apply, as well as a full-exemption from inheritance tax for certain individuals.
Who has to apply and pay property tax?
If you bought or otherwise acquired real estate in the previous year, you must file property taxes. This is also true for those who were in the process of buying a property which was transferred over by 1/1/2023. It may be a plot of land, an apartment unit, or a building.
If the property was not under your ownership by the new taxable calendar year, you will not have to declare it. In this case, the property remains the tax obligation of the previous owner. Also, keep in mind that any significant changes to a property (e.g. extending its size) requires a new tax declaration.
The Tax Office must also be aware of any sale, donation, or loss of property over the taxable year. If you don’t declare these in time, you may still have to pay taxes on the real estate.
Note: If you have previously declared a property and there were no significant changes, a new declaration isn’t necessary.
Which property is exempt from real estate tax?
In certain cases, properties are exempt from taxation. These can include:
- The sale of property that you lived in for more than 2 years
- The sale of property that you have owned for more than 10 years (5 years if the purchase was before 2020)
Recent amendments to the Income Tax Act also now stipulate two new criteria the property can meet for tax exemption. By meeting both criteria, you can exempt the income from the sale of a family house or apartment unit before the length of ownership requirement. In other words, the property is exempt from taxes before the 2 / 5 / 10 year limits above.
In order to exempt the property from taxes this way, you must:
- Use the funds from the sale to “procure your own housing needs” (such as purchasing land, an apartment, a house, or doing construction).
- Notify the tax authorities of the income the tax return filing deadline of the tax period you received the funds.
Note: Only natural persons can claim property tax exemption. The property cannot be any company / business property.
A practical example
Say that you inherited a house from your parents and subsequently sold it for approximately CZK 2 million. The property also does not fall under any exemptions as listed above.
If you inherited and also sold the property in the same tax year, you will not have to pay property tax. For example, you inherited the property in March 2021, and sold it by June 2021. In this case, the real estate tax was the obligation of the previous owner.
Real estate tax would apply if the property was inherited in March 2021 and sold for example in June 2022. In this case, the seller must declare the property for the 2022 tax period. This entails filing a partial real estate tax return starting from January. The taxpayer can then apply this to reduce their tax liability for the sale of the real estate in 2022.
What period does the real estate tax return cover?
The standard period for property tax is the calendar year. Property tax returns thus account for the state of ownership from 1 January of the given year for the tax period of the year. Any changes that occur during the tax period are not taken into account in tax reporting.
You are responsible to submit the tax return to the local Tax Office once every year. The office you submit to depends on the territorial jurisdiction of the properties (e.g. the location of your existing taxpayer’s file).
New taxpayers must apply for a territorial workplace for their taxpayer’s file
When is the property tax payment deadline?
The standard deadline to pay property tax in the Czech Republic is by 31 May, and this remains the same in 2023. This is the latest possible date you can pay property tax.
Note: If you owe an amount exceeding CZK 5000, you can split payments in half until the end of October.
Also, always be sure to check important deadlines on paying real estate for a specific year through Financial Administration offices.
Do you need to file every year?
You are only obligated to pay the immovable property tax if there have been changes in tax circumstances over the tax period.
For example, you will not need to file if:
- You have previously paid taxes on the property, and there have been no significant changes decisive for determining the tax.
- The taxpayer remains the same, with no change in ownership on the property.
- An official authority determined the tax for previous tax periods, and there have been no significant changes.
Also, the taxpayer should not file if only in order to:
- Change their tax rates
- Alter the average price of land in existing individual cadastral territories (Section 5, Paragraph 1 of the Act on Tax on Immovable Property)
- Determine or change a coefficient (section 6, paragraph 4; section 11 paragraphs 3 and 4; or section 12 on the Act on Tax on Immovable Property)
- Terminate tax exemption when the municipality stipulates so by generally binding decree (§ 4 paragraph, 1, letter v). It also must not be to report the expiry of a period (pursuant to section 17a of the Act on Tax on Immovable Property) when the object is not even partially exempt for another reason, or
- Change of jurisdiction
Get professional tax assistance in the Czech Republic
Are you in need of professional advice on taxes? At Pexpats, our certified accountancy services ensure reliable, hassle-free reporting for all our clients. No matter if you’re a first-time taxpayer, or simply trying to reduce your tax burden further, our accountants can assist. Simply reach out and let us know your needs, whether it’s a property tax return or filing your personal income.