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Information about property market in Czechia and Slovakia

Purchase of Czech and Slovak real estate by foreigners

In Czech republic foreigners are treated the same way as the local citizens. There are no limitation as far as ownership of real estate is concerned, there are no differences in taxation of property owned by locals of foreigners. So the investor gets better treatment here than in some other EU countries. Several EU member countries limit what property can be owned by foreigners and some tax foreigners by higher rates than the locals.

Some people still buy property in Czechia via locally registered company to be able to get better mortgage conditions from the banks.

In Slovakia foreigners could buy most of the real estate no matter from which country they were. The law from 2014 limited the ownership of agricultural land and forests. However after pressure from EU the government backed down and prepared new regulations. Even under the old arrangement, all foreigners could buy anything if they registered a company in Slovakia and owned the land or forest via this company.

Property taxes in Czechia and Slovakia

Since November 2016 the property transfer tax of 4% has to be paid by the buyer (it used to be paid by the seller). The tax is calculated from the sales price or from the price determined by apraisal expert. The tax is paid from the amount that is higher. If the property is acquired via acquisition of the company that has the property registered in the land register, then no property transfer tax is paid.

When a newly constructed residential property is sold the VAT has to be charged on top of the sales price. If the apartment is smaller than 120 sq. meters the tax rate is 15 %, if it is larger, then 21 % VAT applies. In case of commercial property the 21 % VAT applies. To give you an example: if you buy old apartment house you do not pay any VAT. If you refurbish it and sell the refurbished flats within 5 year time since the date when the construction was finished, then you have to charge 15 % VAT to all the buyers. If you rent the apartments out for five years and only then sell them, then you do not have to charge any VAT to the buyers.

In Slovakia the tax regime is in some respects more friendly. There is no property transfer tax there whatsoever. So neither the buyer, nor the seller have to pay anything to the state in tax if they purchase/sell real estate. VAT regulations are similar to the ones in Czech republic. As the rules are complex and parts of it may change, consult tax advisor for details of your particular situation.




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