Owning and renting property in the Czech Republic involves a range of tax obligations and benefits that entrepreneurs must consider. In a detailed seminar by Irina Yakunina, Managing Partner at DoMyTax, key tax aspects related to this topic were thoroughly discussed.
Main Types of Rental and Their Taxation
1. Long-term Rental:
• Considered as rental if the term exceeds 48 hours.
• Includes rent payments and possibly utility payments.
• Rental income is subject to income tax only.
• Expenses can be accounted for in two ways: flat-rate expenses (30% of income) or actual expenses.
2. Short-term Rental:
• Renting property for less than 48 hours.
• May include additional services such as cleaning.
• Considered business activity and is subject to additional taxes, including contributions to the Pension Fund and Health Insurance Fund.
• Requires registration as a sole proprietor.
Actual and Flat-rate Expenses
• Flat-rate Expenses:
• 30% for long-term rental.
• 60% for short-term rental and accommodation services.
• The maximum amount of flat-rate expenses cannot exceed 600,000 CZK.
• Actual Expenses:
• Include property depreciation, repair costs, utility payments, mortgage interest, furniture, and other expenses related to generating income.
Property Tax
• Paid only by the property owner.
• Calculated and paid a year in advance.
• In case of property sale, the tax is paid by the person who owned the property on January 1 of the current year.
• In 2024, changes in tax rates and increasing coefficients led to significant increases in tax payments in some areas.
Important Steps for Property Owners and Renters
1. Registration:
• As a sole proprietor for short-term rentals.
• In the local administration for paying the city tax.
• With the police for registering foreign guests.
2. Income and Expense Accounting:
• Collecting and storing all documents confirming income and expenses.
• Annual tax return filing and timely tax payments.
For a more detailed understanding of the tax aspects of owning and renting property in the Czech Republic, and to receive professional assistance, please contact DoMyTax through our website or chat. We are always ready to help you optimize your tax obligations and ensure the financial efficiency of your business.
