Transfer of real estate ownership from a company to a founder

We offer a service of transferring a real estate ownership from a company's balance sheet in an optimal taxation format.
TRANSFER OWNERSHIP UNDER AN IE TRADE LICENSE
from80000
CZK
/
4000
EUR
3 service packages:
1) Mini – 80.000,- CZK;

    The price includes:

  • Analysis of the provided documents and choosing of the optimal solution option
  • Handling of the property transfer
  • Liquidation of the company (removal of the company’s data from the Trade register)
  • Making amendments to the real estate cadastre due to change of the owner
  • Handling one transfer of share between the founders
2) Optimum – 100.000,- CZK

    The price includes:

  • All services of the "Mini" package, plus:
  • Preparation and submission of financial statements of the liquidating company
  • Preparation of an Income Tax report for the IE
  • Property market value assessment
3) «All Inclusive» – 110.000, - CZK

    The price includes:

  • All services of the «Optimum» package plus:
  • Property market value assessment
  • Registration as the IE
  • Termination of the IE license
TRANSFER OWNERSHIP UNDER A COMPANY LIQUIDATION
from80000
CZK
/
4000
EUR
3 service packages:
1) Mini – 80.000,- CZK;

    The price includes:

  • Analysis of the provided documents and choosing of the optimal solution option
  • Calculation and processing of the liquidation balance, transfer of property to the founder
  • Company’s liquidation process (notary services, liquidator’s services, removal of the company’s data from the Trade register)
  • Making amendments to the real estate cadastre due to the change of the owner
  • Handling one transfer of share between the founders
2) Optimum – 100.000,- CZK

    The price includes:

  • All services of the "Mini" package, plus:
  • Preparation and submission of financial statements (interim report, liquidation report and possibly the current annual report, depending on situation)
3) «All Inclusive» – 110.000, - CZK

    The price includes:

  • All services of the «Optimum» package plus:
  • Expert assessment of real estate value

Who will benefit from this service?

Before 2009, foreigners were not allowed to purchase the Czech real estate. As a solution for the purchase of real estate, a Czech company was registered for which the real estate later on was purchased. Because the change of real estate ownership from the company to the founders was subject to a real estate transfer tax in addition to an income tax costs, no one performed the property’s transfer to the actual owners. Starting 01.12.2019, the property transfer tax was abolished, which opened up the possibility of changing the ownership with small losses. The main obstacle is the low residual value of real estate on the company's balance sheet. If the transfer is made in the form of a regular property sale, it will incur a significant corporate tax payment.

What are the options for transferring the real estate from the company to an individual?

There are several choices:

1. Transferring of the company’s property to the ownership of the founder without liquidating the company

This is one of the options for transforming the company. The property, including liabilities, are transferred to the founder who is registered as the Individual Entrepreneur. Later on, the Individual Entrepreneur transfers his commercial property for personal use. After the property transferred to yourself, the property could be sold or donated as a deed of gift.

    Conditions:

  • there should be only one company’s founder, otherwise other founders will have to pay the market share of the property value price, which will complicate the process
  • the founder has to be registered as the Individual Entrepreneur at the time of the property ownership transfer

    Advantages:

  • Fast process of property transferring and company liquidation
  • No requirement in making a real estate appraisal at the time of transfer
  • Easy process of the company liquidation, since s.r.o. with “no assets” is being liquidated; there is no need to wait for 3 months for possible creditors’ appeals/claims, as it usually happens during the standard company liquidation procedure; and there is no need to obtain a consent from the tax authorities regarding the process of the company liquidation

    Disadvantages:

  • Requirement to register as the Individual Entrepreneur
  • For the period when the Individual Entrepreneur is registered, it will be necessary to pay the minimum monthly insurance premiums for social and health insurance
  • To register as the Individual Entrepreneur, you have to hold a residence permit in the Czech Republic or a status of an EU citizen and to obtain a ‘police clearance’ certificate

2. Real estate transfer as a natural liquidation balance during liquidation process

In the event of the company liquidation, the founders are paid the liquidation balance in monetary terms or in the form of a property share. In case of transfer of property in kind, it is necessary to assess the market value at the time of the company liquidation.

    Advantages:

  • no requirement to register as the Individual Entrepreneur (for registration as the Individual Entrepreneur, you have to be a holder of a Czech residence permit or an EU citizen status, and to obtain a ‘police clearance’ certificate)
  • no need to pay monthly social and medical insurance deductions, pending the Individual Entrepreneur’s licence termination. In 2021, the total for the SSZ and VZP insurance deduction’s payment is 4.981, - CZK / month. No requirement to pay the VZP and SSZ deductions, if the IE has monthly employment income for at least a minimum wage, or for being a student, or for being on maternity leave, etc.

    Disadvantages:

  • Longer process (classic company liquidation takes about 5-6 months), a change of a property owner in the cadastre requires about a month
  • Additional costs for accounting services (preparation of interim balance sheet report, liquidation balance sheet report)
  • Requirement to obtain an expert assessment of the real estate market value

3. Real estate sale directly from the company to a founder

This option in terms of taxes is usually the least cost-effective. One can sell real estate to a close relative / loved one at a price no lower, than the market value price. As a rule, the market price differs significantly from the property’s residual book value. First, the company will pay income tax at a rate of 19%, and then dividends will be paid to founders, after this, the founders themselves will have to pay 15% tax on dividends received.

    Advantages:

  • No requirement to register as the Individual Entrepreneur, no need to liquidate the company
  • Quick transfer the ownership of the real estate
  • Not required to obtain an expert assessment of the real estate value
  • Low processing costs

    Disadvantages:

  • As a rule, there will be very high taxes
  • The company will become unwanted / with a low value

Questions & Answers

  • Will I pay income tax if, after transferring the property to myself, I would like to sell it?
    To be exempt from income tax payment, which might arise from the subsequent real estate sale, the founder will have to fulfill a condition: for at least 2 years, before the property is sold, use this real estate for personal household purposes.
  • Could the company sell the real estate to me or my family members for a low price or donate it?
    The sale to a close relative/loved one is a subject to a special transfer pricing. This means that the income of your close relative/loved one will be calculated based on the property market value price, regardless of the price specified in a purchase and sale agreement. In addition, a restriction was introduced in matters of a donation of the company property to affiliated persons.
  • What are the steps of the declaration preparation process in DoMyTax?
    1) You provide the latest company balance sheet showing a breakdown of the balance sheet items (rozvaha analyticky nebo v plném rozsahu),
    2) Confirmation is sent to your email address with a request to provide the missing documents and a draft of a cost estimate and service delivery terms,
    3) You receive a preliminary analysis, the most optimal solution, and a tax burden calculation,
    4) After receipt of your advance payment, DMT starts the process of transferring the real estate ownership from the company according to the selected option,
    5) You receive personal ownership of the real estate.

Additional services:

  • real estate appraisal (in case of liquidation balance) – from 6.000,- CZK
  • accounting services (interim report, liquidation report and possibly the current annual report, depending on situation) – from 3.500,- CZK - each report
  • income tax report for the IE – from 2.000,- CZK
  • shares transfer between the founders (each subsequent one, if the company has several founders) – from 6.000,- CZK
  • registration of the IE – 9.500,- CZK
  • termination of the IE – 5.000,- CZK