The transfer of real estate ownership from a company to a founder

We offer the service of transferring real estate ownership away from a company's balance sheet in a format required for tax optimization.
TRANSFER OF OWNERSHIP UNDER AN IE TRADE LICENSE
from80,000
CZK
/
4,000
EUR
3 service packages:
1) MINI – 80,000 CZK

    This price includes:

  • An analysis of the provided documentation and the selection of an optimal solution
  • Handling the transfer of property
  • Liquidation of the company (removal of the company’s data from the Trade register)
  • Making amendments to the real estate cadastre due to changes in ownership
  • Handling one transfer of shares between founders
2) OPTIMUM – 100,000 CZK

    This price includes

  • All the services of the "Mini" package, plus:
  • The preparation and submission of financial statements on behalf of the liquidating company
  • The preparation of an Income Tax report for the IE
  • A property market value assessment
3) ALL INCLUSIVE – 110,000 CZK

    This price includes:

  • All the services of the “Optimum” package plus:
  • IE registration
  • Termination of an IE license
TRANSFER OF OWNERSHIP UNDER COMPANY LIQUIDATION
from80,000
CZK
/
4,000
EUR
3 service packages:
1) MINI – 80,000 CZK

    This price includes:

  • An analysis of the provided documentation with the selection of an optimal solution
  • The calculation and processing of the liquidation balance when transferring property to the founder
  • Management of the company’s liquidation (notary services, liquidator’s services, removal of the company’s data from the Trade register etc.)
  • Making amendments to the real estate cadastre due to a change in ownership
  • Handling one transfer of shares between founders
2) OPTIMUM – 100,000 CZK

    This price includes:

  • All the services of the "Mini" package, plus:
  • the preparation and submission of financial statements (interim reports, liquidation reports and possibly a current annual report, depending on the situation)
3) ALL-INCLUSIVE – 110,000 CZK

    This price includes:

  • All the services of the “Optimum package” plus:
  • An expert assessment on the value of real estate

Who may benefit from this service?

Before 2009, foreigners were not allowed to purchase Czech real estate. As a workaround to this problem, a Czech company could be registered, from which the real estate, later on, could be purchased. Because the transfer in real estate ownership, from the company to the founders, was subject to a real estate transfer tax in addition to income tax costs, no one transferred the property to the actual owners. Starting from 01.12.2019, property transfer tax was abolished, which opened up the possibility for changing ownership with relatively small losses. The main obstacle is the low residual value of real estate on the company's balance sheet. If a 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 real estate from the company to an individual?

There are a few:

1. The company’s property may be transferred to the founder without liquidating the company

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

    Conditions:

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

    Advantages:

  • Fast processing of property transfer and company liquidation
  • No requirement for a real estate appraisal at the time of transfer
  • Easy company liquidation, Since an SRO with ‘no assets’ is being liquidated; there is no need to wait 3 months for creditors’ appeals/claims, as it usually happens during the standard company liquidation procedure. Moreover, there is no need to obtain consent from the tax authorities during liquidation.

    Disadvantages:

  • There is the requirement to register as an Individual Entrepreneur
  • Over 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 an Individual Entrepreneur, you have to hold a residence permit in the Czech Republic or status as an EU citizen. You must also obtain a ‘police clearance’ certificate.

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

In the event where a company is liquidated, the founders are paid a liquidation balance in monetary terms or in the form of property shares. When there is a property transfer of any kind, it is necessary to assess the market value at the time of company liquidation.

    Advantages:

  • There is no requirement to register as an Individual Entrepreneur (for registration as an Individual Entrepreneur, you have to be a holder of a Czech residence permit or have EU citizen status, and you should also obtain a ‘police clearance’ certificate)
  • One may avoid monthly social and medical insurance deductions, pending the termination of the Individual Entrepreneur’s licence. As of 2021, the sum of SSZ and VZP insurance deductions is 4,981 CZK / month. This requirement can be avoided if the IE is employed and has income amounting to at least minimum wage, is a student, is on maternity leave, etc.

    Disadvantages:

  • This is a longer process. Classic company liquidation takes around 5-6 months, while a change in property ownership in the cadastre takes about a month.
  • Additional costs for accounting services arise (e.g. the preparation of interim balance sheet reports, the liquidation of balance sheet reports etc.)
  • There is a requirement to obtain an expert assessment of the real estate market value

3. Sell the real estate directly to the 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. 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 the founders. After this, the founders themselves will have to pay 15% tax on dividends received.

    Advantages:

  • There is no requirement to register as an Individual Entrepreneur. Also, there’s no need to liquidate the company.
  • Quick ownership transfer for real estate.
  • Expert assessment of the real estate value not required.
  • Low processing costs.

    Disadvantages:

  • As a rule, taxation will be very high.
  • The company may end up as 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, which might arise from the subsequent sale of real estate, the founder will have to fulfill one condition: for at least 2 years, before the property is sold, the real estate must have been used as a personal place of residence.
  • 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 subject to a special kind of transfer pricing. This means that the income of your close relative/loved one will be calculated based on the property’s market value, regardless of the price specified in the purchase and sale agreement. In addition, a restriction has been introduced relating to the donation of the company’s property to affiliated persons.
  • What are the steps of the declaration preparation process in DoMyTax?
    1) You should provide the latest company balance sheet showing a breakdown of the balance sheet items (rozvaha analyticky nebo v plném rozsahu).
    2) Confirmation will then be sent to your email address with a request to provide the missing documents, a draft of a cost estimate and service delivery terms.
    3) You’ll then receive a preliminary analysis, an optimal solution, and a tax burden calculation.
    4) After receiving your advance payment, DoMyTax starts the process of transferring the real estate ownership from the company to the individual of your choice.
    5) Personal ownership of the real estate is achieved.

Additional services:

  • Real estate appraisal (in case of a liquidation balance) – from 6,000 CZK
  • Accounting services (interim reports, liquidation reports and possibly current annual reports, depending on the situation) – from 3,500 CZK per report
  • Income tax report for an IE – from 2,000 CZK
  • The transfer of shares to founders (price per founder) – from 6,000 CZK
  • IE registration– 9,500 CZK
  • IE license termination – 5.000 CZK