We would like to remind you that until 31 December 2024 it is still possible to trade securities and shares in corporations without the exemption limit if the so-called time test is met, namely 3 years in the case of securities and 5 years in the case of shares. As of 1 January 2025, the conditions will be tightened and a tax exemption limit of CZK 40 million per tax year will be introduced for income from the sale of securities and shares.

Exemption from personal income tax will be limited to CZK 40 million in total for all income from the sale of securities and business shares for the tax period (the limit cannot be applied separately to each individual income). Income exceeding the limit of CZK 40 million will need to be apportioned into taxable and exempt income due to the limitations on the deductibility of expenses that you will be able to claim against taxable income.

At the same time, the individual may claim the market price as of 31 December 2024 determined in compliance with the Valuation Act as an expense in the tax return. The use of this option makes sense when the securities/shares are not publicly traded or the acquisition price is relatively low. In such a situation, the preparation of an expert report will be required.

It should also be noted that if an individual sells a security/ownership interest in 2024, but the funds are not paid to the beneficiary until 2025, this income will fall within the newly introduced limit of CZK 40 million. It will be possible to claim as an expense both the value of the security under the Valuation Act on the date of the sale, i.e. 2024, and the expense in the form of the cost or acquisition price of the security.

Finally, we would like to add that there is now a proposal in the Chamber of Deputies which, if adopted, would allow for the tax exemption of income from the sale of crypto-assets under certain conditions and would also include it under the common limit of CZK 40 million as for income from the sale of securities/ownership interests. The proposal has already been approved by the Chamber of Deputies and we will keep you informed about its further progress in the legislative process.

If you may be affected by these changes in 2025 and beyond, please do not hesitate to contact us. We will be happy to assist you in this area, either with the setup of your capital portfolio or with the revaluation of securities and business shares according to the Valuation Act as of 31 December 2024.