Capital Gains Tax Czech Republic 2025

From 2025, important changes concerning the taxation of capital gains from the realisation of assets – such as securities, shares in the capital of legal entities, real estate and cryptocurrencies – will come into force in the Czech Republic. Although there is no separate capital gains tax in the Czech Republic, all income arising from capital gains is subject to personal income tax and must be declared in accordance with the established procedure.

General concept of capital gains taxation

Capital gains are treated under income tax legislation as income of an individual received outside of entrepreneurial activity. Such income is subject to inclusion in the tax base under the general rules. The tax burden is determined depending on the total annual income of the taxpayer and is taxed on a progressive scale. The base rate is 15% and is applied to annual income not exceeding the established limit. If this threshold is exceeded, a higher rate of 23% is applied to a part of the income. This applies both to income from the sale of securities, shares, real estate and profits from transactions with crypto-assets.

As of 1 January 2025, a key innovation has been introduced – the maximum limit of exemption from taxation of income received from the sale of investment assets, such as shares, bonds, stakes in the charter capital of legal entities, as well as cryptocurrencies. While previously the taxpayer had the possibility to fully exempt such income from taxation if the minimum holding period (3 or 5 years depending on the type of asset) is met, now the exemption is limited in amount – not more than CZK 40 million per year. Income exceeding this limit is included in the tax base and is subject to taxation at the applicable rates. The limit does not apply to each individual transaction, but to the total annual income from all transactions involving the disposal of the relevant assets.

Conditions and terms of holding assets for exemption

The legislation retains the minimum asset holding period requirements as a condition for the exemption of income from tax. However, from 2025, these requirements apply up to a specified limit. The key parameters are as follows:

• Securities (shares, bonds): the minimum holding period is 3 years.
• Shares in the authorised capital of legal entities: minimum holding period – 5 years.
• Real estate used as a principal residence: exemption is possible if held for at least 2 years.
• Other real estate: the minimum holding period is 10 years if the object was not used for business activities.
• Cryptocurrencies: no holding period for exemption purposes, income from their realisation is fully taxable from the first year.

Peculiarities of cryptoasset taxation in the Czech Republic

According to the Czech tax regulation, cryptocurrencies do not qualify as financial instruments. They are treated as property similar to goods, and transactions with them do not fall under the rules provided for securities. This means that even if a taxpayer holds cryptocurrency for a long period of time, the taxpayer is obliged to include income from its realisation in the tax base, unless the total amount of income from such transactions does not exceed the exemption limit of 40 million kronor. It is also important to take into account that if cryptocurrencies were used as part of business activities (e.g. settlements with counterparties, payment for goods or services), the resulting income is taxable as business income and is taxed taking into account the relevant accounting rules.

Real estate and capital gains

Transactions with immovable property are governed by separate provisions. Income from the sale of immovable property may be exempt from tax under a number of conditions:

• If the property has been used as a principal residence for at least two years immediately prior to its sale, the income is fully exempt.
• If the property has been owned for at least ten years (provided it has not been rented out or used in a business), full exemption applies.
• In some cases, tax exemption is allowed when reinvesting the proceeds in the purchase of new property for personal housing purposes.

Benefits and non-taxable minimums

The Act provides for a number of additional provisions allowing certain income from asset transactions to be excluded from the tax base:

• For the sale of securities in an amount not exceeding CZK 100,000 in a calendar year, the taxpayer is exempt from both the payment of tax and the obligation to declare the relevant income.
• For transactions falling under the minimum limits and not requiring the payment of tax, there is no need to file a tax return, provided that there are no other sources of taxable income.

Procedure for filing a tax return and due date for payment of tax

Capital gains are declared as part of the annual tax return. The obligation to file a declaration arises if there is taxable income to be included in the personal income tax base. The deadline for filing the declaration generally expires on 1 April of the year following the reporting year. If the declaration is filed with the assistance of a tax consultant, the deadline is extended to 1 July. The tax is paid in a lump sum or according to an advance payment schedule if the amount of the liability exceeds the thresholds established by law.

Practical recommendations for residents and non-residents

To optimise the tax burden, it is recommended to:

• Plan the realisation of assets in advance, taking into account the exemption limit.
• Document the period of ownership of assets and confirm expenses related to their acquisition and realisation.
• In the case of cryptocurrencies, record all transactions, fix the dates of purchase and sale, and maintain a transparent record of the exchange rate value on the date of the transaction.
• Non-residents receiving income from the sale of Czech assets should take into account the provisions of international double tax treaties, as in some cases the tax liability may arise in another jurisdiction.

Czech capital gains tax for private persons and legal entities

Starting from 2025, the Czech Republic has an updated regime for taxation of income from transactions with assets, including securities, capital shares, real estate and crypto-assets. Although there is no stand-alone capital gains tax, gains from the disposal of assets are included in the taxable income tax base and are regulated according to the general principles laid down in the Czech Income Tax Act.

1. General provisions for individuals

Income from capital gains (both financial and non-financial) is subject to personal income tax. Depending on the total amount of annual income, either a basic rate of 15% or an increased rate of 23% is applied. The first rate applies to the amount of income not exceeding the statutory limit, and the second rate applies to the part of income exceeding this threshold. In 2025, an additional mechanism of limited exemption was introduced: if income from the sale of investment assets (including cryptocurrency) does not exceed CZK 40,000,000 in a calendar year and the minimum holding period requirements are met, such income may be exempt from tax. Exceeding the limit is subject to taxation at general rates.

2. Conditions for exemption from taxation

In order to apply the exemption, two conditions must be met simultaneously:

• achievement of a minimum holding period for the relevant asset;
• the total income from the alienation of assets during the calendar year does not exceed 40 million kronor.

If one of the conditions is not met (e.g. the holding period of the asset is shorter than required or the income exceeds the limit), a tax liability arises on the relevant part of the profit. Separate rules apply to real estate, depending on the nature of its use, as well as to cryptocurrencies, to which holding periods do not apply.

3. Cryptocurrencies

According to Czech tax law, virtual assets (cryptocurrencies) qualify as property that is not a financial instrument. This means that income from their sale cannot be exempted based on the period of ownership. However, from 2025, a general exemption limit is allowed for cryptoassets – provided that the amount of income from such transactions does not exceed CZK 40,000,000 and they were not carried out as part of a business activity. Cryptocurrencies acquired for investment purposes are taxable at the moment they are exchanged for fiat funds, other tokens, goods or services. Income is determined as the difference between the selling price and the documented acquisition and holding costs.

4. Real estate

Real estate transactions are taxed depending on the length of ownership and the nature of the use of the property:

• no tax is levied on the sale of a principal dwelling used for at least two years;
• when selling other real estate, exemption is possible only after 10 years of ownership;
• income from the sale of real estate used for income generation (e.g. renting out) is subject to taxation for any period of ownership, unless the conditions for reinvestment or exemption are met.

5. Capital gains from legal persons

In the case of legal entities, including Czech and foreign companies, capital gains are not distinguished as a separate category of income, but are included in the total taxable result. Income from the sale of assets (securities, shares, crypto-assets, real estate) is subject to income tax at the rate of 21%. Tax deferral or relief is possible for certain types of income (e.g. participation in holding structures, holding shares for 12 months or more, participation in EU-registered companies), but such relief is subject to strict conditions, including verification of the business purpose and ownership structure. If a company conducts transactions with crypto-assets, such income is also subject to income tax and the transactions must be accounted for in accordance with Czech or international financial reporting standards (depending on the applicable accounting system).

6. Taxation of non-residents

For individuals who are not tax residents of the Czech Republic, tax liability on capital gains arises in limited cases:

• on the sale of real estate located in the Czech Republic;
• on the sale of shares in Czech legal entities, if the share exceeds the thresholds established by law;
• in other cases if the applicable double taxation treaties provide for taxation of such income in the Czech Republic.

In other cases, taxation may take place in the country of tax residence of the individual. The practical implementation of taxation of non-residents requires analysing the provisions of the relevant international agreement between Czech Republic and the state of residence of the taxpayer. Non-resident legal entities dealing with Czech assets may be obliged to register as a taxpayer and file reports, especially if they have a permanent establishment or conduct regular business activities in the jurisdiction of the Czech Republic.

Examples of capital gains tax calculation in the Czech Republic

Example 1

A resident sold shares in a Czech company after 4 years of ownership for a total amount of CZK 38,000,000. As the holding period exceeds 3 years and the income does not exceed the exemption limit, no tax liability arises.

Example 2

A resident sold cryptocurrency worth CZK 45,000,000.
Income up to CZK 40,000,000 may be exempt (if there is no entrepreneurial use). Income tax will be charged on the amount exceeding CZK 5,000,000 at the rate of 15% or 23%, depending on the total annual income.

Example 3

A legal entity sold a property that had not previously been used for business purposes for CZK 10,000,000, while the cost price was CZK 7,000,000.
The difference of CZK 3,000,000 is included in the tax base and taxed at the rate of 21%.

Exemption from capital gains tax in the Czech Republic

As of 1 January 2025, in accordance with the provisions of Act No. 349/2023, changes affecting the taxation of personal income from the sale of securities and shares in commercial corporations entered into force in the Czech Republic. A limit on the maximum annual amount exempt from taxation was introduced, which has a significant impact on the tax planning of investors and business owners when deciding whether to sell assets. This reform makes adjustments to the tax strategy of individuals holding corporate rights or investment instruments and requires a more careful approach to structuring dispositions. This contribution examines three key aspects affecting the taxation of investment income, taking into account the updated legal framework.

One of the most discussed elements of the tax reform envisaged in the process of preparing the amendments was the complete abolition of the temporary test for the exemption from income tax of income from the sale of securities and shares in commercial corporations if the amount of such income exceeds CZK 40 million per year. However, this proposal was not approved, thus preserving the principle of tax exemption under the temporary test. Thus, starting from 2025, income from the sale of securities and shareholdings continues to be subject to full exemption from personal income tax, provided that the minimum holding period of the asset is met – three years for securities and five years for shareholdings in the capital of commercial corporations. However, a new aggregate exemption limit of 40 million kronor per year has been established. Income exceeding this limit is subject to taxation in accordance with the applicable rates, and the tax base may be reduced by a proportionate share of the expenses incurred in acquiring the relevant assets or by an amount determined by an expert opinion. The established limit applies to the total income of the taxpayer from all transactions with securities and participatory interests for the calendar year. The key point is not the date on which the sale agreement was concluded, but the moment when the income was actually received. If, for example, a contract is signed in 2024, but the cash payment is made in 2025, such income is subject to the new limit of 40 million kronor. The same rule applies if the purchase price is paid in stages – each amount actually received after 1 January 2025 is taken into account within the annual exemption limit. The change regarding the application of increased tax rate should also be taken into account. In 2024, the income threshold above which the 23% rate applies instead of the basic rate of 15% was reduced from 48 to 36 multiples of the average salary. This innovation additionally affects the taxation of high-income transactions and requires a comprehensive analysis in tax planning of investment activities.

Sale of securities and shares in the Czech Republic

As of 1 January 2025, provisions providing for an important change in the tax treatment of the disposal of participatory interests and securities in commercial corporations will come into force. Under the new procedure, persons who dispose of a company or a shareholding after that date and do not wish to pay tax on the full amount of the free disposal less acquisition costs are required to submit a substantiated opinion of an independent appraiser on the market value of the relevant asset. The valuation must reflect the value as of a specific reporting date – 31 December 2024. However, it is allowed to issue an expert opinion for a later period, provided that it explicitly states the value in effect as of that date. For publicly traded securities acquired before 31 December 2024, the last available market quotation at the end of 2024 in accordance with the applicable property valuation norms may be used as the value. According to the approved mechanism, the amount of CZK 40 million will be deducted from the realisation price, after which the value specified in the expert report will also be proportionally adjusted. As a result, the taxable base will be determined as the difference between the adjusted disposal proceeds and the correspondingly reduced appraised value.