News Article Czech Republic economy owner property tax
by Property Forum | Economy

As part of the so-called consolidation package, which has changed several dozen laws since January in the Czech Republic, the property tax is rising by an additional 80% starting this year, reports

According to the estimates of the Ministry of Finance, thanks to this, cities and municipalities will receive approximately CZK 10 billion (€40,46 million) more. In addition to the increase in the rate for tax collection, the government also agreed on other adjustments. A new feature that the domestic property tax did not know until now is the automatic valuation according to inflation. However, the coefficient already introduced this year will be reflected in the wallets of real estate owners next year at the earliest.

"The tax burden on the real estate segment in the Czech Republic has been negligible for a long time, which was further highlighted by the abolition of the tax on the acquisition of real estate in 2020," the Ministry of Finance said in its statement explaining the need to increase the tax. The share of real estate tax in total GDP for 2021 was 0.2%, which ranked the Czech Republic 35th out of a total of 36 OECD countries. In addition to the inflation coefficient, the government also adjusted the definition of building land and paved areas, taxed garages and recreational facilities, reduced support for building savings and cancelled the tax exemption for so-called executive apartments.

According to Petr Koubovský, tax advisor at Rődl & Partner and head of the property tax section of the Chamber of Tax Advisors of the Czech Republic, the total burden on the taxpayer can be even higher, due to the so-called local coefficients, which municipalities can adjust by decree in the range of 1.1-5.0. "However, even a minimal increase will almost double. For example, the owner of an apartment in Prague with an area of ​​60 sqm, who until now paid approximately CZK 1,600 (€65) in taxes, will now pay more than CZK 3,000 (€121). How much the tax will increase will be decided by the local coefficients of the municipalities," he said.

Property tax applies to all owners of land, residential and non-residential units and other buildings. The taxpayer is also the user of the land if the owner of the land is not known. Those who acquired, disposed of or carried out construction modifications on the property last year, as a result of which there was a change in the size of the built-up area, must notify the tax administrator of this fact by 31st January at the latest.