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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 can also buy most of the real estate no matter from which country they are.

Property taxes in Czechia and Slovakia

Since November 2016 the property transfer tax of 4% has to be paid by the buyer in Czechia (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.

In April 2020 the Government of Czechia has approved draft law that would abolish the property transfer tax. The draft is now in the Parliament and it is very likely that it would be approved since there is little opposition to it. The law could then abolish retroactively the obligation to pay this tax in connection with all the purchases since the 1st January 2020.

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 property transfer does not exist and Czechia is on its way to the same model should the current tax proposal be passed by the Czech Parliament. VAT regulations in Slovakia 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.