Newsletter 12/2025

Personal Income Tax

SALE OF SECURITIES AND SHARES – LIMIT 40 MILLION CZK ONLY FOR 2025

From 1 January 2025, income of an individual from the sale of securities (held for at least 3 years) and shares (held for at least 5 years) is tax‑exempt only up to a total of CZK 40,000,000 per year (combined with crypto assets). Any income above this limit is taxable, with a proportional allocation of the exempt and taxable portions and corresponding expenses.

At the same time, for securities and shares acquired by 31 December 2024, it is possible to apply a revaluation to fair value as of 31 December 2024 and use that value as a tax expense on future sale.

Changes from 2026:

From 1 January 2026, the CZK 40,000,000 limit is removed for sales of securities and business shares. If the holding period requirements are met and they are not business assets, the income will again be fully exempt regardless of amount. The CZK 40,000,000 limit remains only for crypto assets (see below).

CRYPTO ASSETS – New Rules from 2025, Limit Remains After 2026

The amendment to the Income Tax Act in 2025 introduced the first comprehensive regime for taxing crypto assets, effective 15 February 2025. Income of individuals from the transfer of crypto assets is:

• Exempt up to CZK 100,000 per year, if the total gross income from crypto sales does not exceed this amount.
• Exempt after 3 years of holding, but only up to the combined annual gross income limit of CZK 40,000,000 (together with securities and shares). Income above this limit is taxable.

Changes from 2026:

From 2026, the CZK 40,000,000 limit remains for crypto assets, but is removed for securities and shares. In other words, tax exemption for crypto income continues to be limited by the annual threshold, while sales of shares and securities will return to full exemption after meeting the holding period requirements.

TIMING OF TAXATION FOR EMPLOYEE SHARES AND OPTIONS IN 2025

In 2025, rules for taxing employee shares and options changed again. The basic principle is that a taxable benefit arises when the employee acquires the share (or exercises the option). However, if the employer notifies the tax authority of the use of a deferred tax regime, taxation is postponed to a later moment (e.g., sale of the share), similarly to the regime in effect in 2024.

Changes from 2026:

From 1 January 2026, a special regime for “qualified employee options” is introduced, allowing taxation to be deferred until the employee actually receives cash (principle “no tax before cash”). If conditions are met, the income is treated as other income outside employment, without social and health insurance contributions, and the taxation can be postponed for up to 15 years. This new regime does not apply to large corporations or certain regulated sectors.

UNIFIED MONTHLY EMPLOYER REPORT (JMHZ)

In 2025, the law on the Unified Monthly Employer Report was approved. From 2026, it will replace approximately 25 different reports with one comprehensive electronic report, significantly simplifying the reporting obligations to the Social Security Administration (ČSSZ), labor offices, the Ministry of Labour and Social Affairs (MPSV), the Czech Statistical Office (ČSÚ), and the tax authorities. It does not cover reporting to health insurance companies.

Changes from 2026:

The law takes effect on 1 January 2026, but the actual reporting obligation begins on 1 April 2026. The first report, covering January, February, and March 2026, must be filed by 30 June 2026. From reports for April 2026 onward, the JMHZ will be filed on a standard monthly basis.

MANDATORY EMPLOYER CONTRIBUION FOR RETIREMENT SAVINGS (Risk Work)

In September 2025, a new law was approved on mandatory employer contributions to retirement savings for employees performing so‑called Category III risk work, effective 1 January 2026.

Employers must contribute to pension insurance or supplementary pension savings for these employees if the employee requests it and works at least three risk work shifts per month. The contribution counts toward the annual tax‑ and contribution‑exempt limit of CZK 50,000.

Changes from 2026:

No further changes are planned beyond 1 January 2026.

CHANGES IN WITHHOLDING TAX FOR EMPLOYERS

Changes in withholding tax discussed and approved in 2025 are as follows:

• From 1 January 2026, the withholding tax on remuneration of members of statutory bodies who are non‑resident individuals is abolished and replaced by advance tax (with a progressive rate).
• From 1 January 2027, the withholding tax on employment income (e.g., “agreements” and minor employment) will be fully abolished, with a transition to advance tax and the possibility of settlement in annual adjustment or tax return.

Changes from 2026:

In 2026, the first part of the changes applies (non‑resident statutory body members). The second part regarding minor employment is effective from 2027, so there are no further changes to withholding tax in 2026.

Corporate Income Tax

R&D TAX DEDUCTION

In 2025, the “old” regime continues — a 100% deduction of eligible research and development (R&D) costs from the tax base, subject to conditions for qualifying projects and cost documentation. It is also possible to apply the incremental deduction “+10%” (the so‑called 110% part) with a three‑year carry‑forward period.

Changes from 2026:

• The deduction increases to 150% of eligible costs, but only up to CZK 50,000,000 per year.
•  Costs above CZK 50,000,000 remain deductible at 100%.
• The CZK 50,000,000 limit is monitored across the entire group of related companies.
• The 110% incremental part is abolished.
• Unused deduction can now be carried forward for up to 5 years, with greater flexibility similar to tax losses.

Basic requirements for qualifying projects and cost documentation remain.

The new regime is designed as a long‑term change; no major reversals are expected in 2026 — rather, methodological clarifications and guidance from the tax authorities.

INTERNATIONAL TAXATION – Top‑Up Taxes (Pillar 2)

The 2025 amendment to the Equalization Tax Act extends deadlines for filing the first tax return and information return — now up to 18 months from the end of the relevant period. This aims to align with OECD rules and the EU framework for global minimum taxation.

Changes from 2026:

The first “live” deadline for the information return for groups with a 2024 year‑end falls in mid‑2026, and for the tax return in autumn 2026. The rules remain unchanged, but the extended deadlines approved in 2025 will be applied in practice. No major new amendments for 2026 have been adopted; further methodological clarifications are expected.

Value Added Tax

DEADLINES FOR DEDUCTIONS AND ADJUSTMENTS – Change from 2025

The VAT Act amendment effective 1 January 2025 introduced:

• Shortening the period for claiming a VAT deduction to two years, counted to the end of the second calendar year after the year in which the right arose.
• Extending the period for filing corrective VAT returns and adjusting the tax base in some cases to seven years.
• New rules for adjustments for uncollectible and unpaid receivables, including a special regime for small receivables up to CZK 10,000 and mandatory adjustment by the debtor if not paid within 6 months after maturity.

Changes from 2026:

At this time, no amendment has been adopted that would fundamentally change the two‑year period or the adjustment system from 2026.

THRESHOLDS FOR VAT REGISTRATION

From 2025, turnover for compulsory VAT registration is assessed on a calendar‑year basis (1 January – 31 December) against two thresholds: CZK 2,000,000 and CZK 2,536,500. Exceeding the lower threshold results in VAT liability from 1 January of the following year; exceeding the higher threshold results in VAT liability from the day after exceeding the threshold.

Changes from 2026:

In 2026, this system continues with transitional provisions (e.g., how to treat turnover from 2025 when deregistering and re‑registering). There are no further threshold changes; rules introduced in 2025 become fully effective.

Accounting and Mandatory Audit

The amendment to the Accounting Act (No. 316/2025 Coll.) introduces two main changes: increased thresholds for categorizing accounting units and a narrowed scope of mandatory audit requirements.

HIGHER THRESHOLDS FOR ACCOUNTING UNIT CATEGORIES

From 3 September 2025, the threshold amounts for category classification (micro, small, medium, large) increased:

• Asset limit for a micro entity increased from CZK 9,000,000 to CZK 11,000,000.
• Asset limit for a small entity from CZK 100,000,000 to CZK 120,000,000.
• Asset limit for a medium entity from CZK 500,000,000 to CZK 600,000,000.
• Corresponding revenue thresholds increased by about 25% (e.g., from CZK 18,000,000 to CZK 22,000,000 for micro entities).
• Criteria for average number of employees remain unchanged (micro ≤ 10; small ≤ 50; medium ≤ 250).

Classification still depends on not exceedingly at least two of the three criteria in two consecutive reporting periods, meaning many companies may move to a lower category, affecting their reporting requirements.

Changes from 2026:

Thresholds remain unchanged in 2026. Their full practical effect begins through the rules for category changes based on two consecutive financial statements. No new amendment for 2026 has been adopted.

MANDATORY AUDIT — Narrowed Scope

From 1 January 2026, § 20 of the Accounting Act changes so that mandatory audit of financial statements primarily applies to:

• Medium and large accounting units.
• Selected entities of public interest.

Smaller companies, newly classified as micro or small do not require an audit (unless other sector‑specific requirements apply).

Changes from 2026:

The audit amendment is designed as a long‑term measure and takes effect on 1 January 2026. No additional significant amendments for the same year have been adopted; companies will focus mainly on practical transition (from audited to non‑audited status and vice versa).