With the adoption of the consolidation package, many changes have been made to the Income Tax Act, which we have already summarised in our article here.

We would like to point out that the conditions for the exemption of income from the sale of securities and shares of business corporations have been tightened with effect from 1 January 2025.

As a reminder, it is currently still possible to trade securities and business shares without the exemption limit if the taxpayer meets the time test of 3 years, and 5 years for business shares.

So, what are the specific changes in the legislation on trading in securities and shares of corporations from 2025?

• For income tax exemption, there is an income limit of CZK 40 million per taxable period, where the limit is counted cumulatively for all income from the sale of securities and business shares (the limit cannot be applied separately to each individual income). Income from the sale of securities and business shares above the limit of CZK 40 million for the tax period will be subject to taxation under Section 10 of the Income Tax Act.
• At the same time, the individual may claim as an expense in the tax return the market value of the security determined in accordance with the Valuation Act as at 31 December 2024.
• It will be necessary to apportion the aggregate income for the tax year into exempt and taxable income due to limitations on the deductibility of expenses. This means that if the taxable income is 10% and the exempt income is 90%, only an expense equal to 10% of the total expenses can be claimed against the income.
• If the sale takes place in 2024 but the funds are not paid to the beneficiary until 2025, the value of the security determined under the Valuation Act as of the date of the sale, i.e. 2024, may be claimed as an expense. However, the taxpayer may still claim the expense in the form of the purchase or acquisition price of the security.

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.