Notice of recently announced tax changes

Notice of recently announced tax changes

We wish to inform you that, in the coming days, the act amending certain laws in connection with the adoption of the Act on the Unified Monthly Employer Reporting (in Czech: Jednotné měsíční hlášení zaměstnavatele, the “Companion Act to JMHZ”) will be published in the Collection of Laws and International Treaties. We already briefly informed you about the legislative process for this Act in our previous newsletter, including amendments adopted by the Senate. In the first half of September, the Chamber of Deputies approved the Senate’s changes, and the legislative process was completed by the President’s signature. The purpose of the following text is to highlight several key tax changes.

I. Repeal of the CZK 40 million exemption cap for individuals’ gains from the sale of securities and shares in corporations

As previously reported, effective in 2025 the consolidation package introduced into the Income Taxes Act a CZK 40 million cap on the tax exemption for individuals’ gains from the sale of securities and shares in corporations. The application of this cap was subsequently extended to gains from the sale of crypto-assets. This means that if a taxpayer in 2025 received—or will still receive—income from the sale of a security, a share in a corporation, or a crypto-asset, and the statutory holding-period test for exemption is met, such income is exempt from tax for 2025 only up to CZK 40 million in total.

Under the Companion Act to JMHZ, an amendment to the Income Taxes Act repeals the CZK 40 million exemption cap for gains from the sale of securities and corporate shares with effect from 1 January 2026. In practice, this returns to the previous legal framework under which an individual’s gain on the sale of securities and shares was exempt without a cap, provided the required holding periods are met – 3 years for securities and 5 years for a share in a corporation not represented by a security.

Please note two important points:

1, Timing: The repeal applies only to income received on or after 1 January 2026. For 2025, the CZK 40 million cap still applies to exemptions.

2, Crypto-assets: The repeal does not apply to gains from the sale of crypto-assets. The exemption for such gains remains limited to CZK 40 million in 2025 and subsequent years.

II. Changes to the tax treatment of certain employee benefits

Effective from 2026, the Income Taxes Act tightens the condition for the tax-exempt treatment of so-called leisure benefits. For these purposes, “leisure benefits” means in-kind benefits provided to an employee (or a family member) at the employer’s tax-non-deductible expense under Section 6(9)(d) of the Income Taxes Act, i.e.:

Healthcare-type benefits (exempt up to the average wage for the calendar year), and

Other leisure benefits (e.g., use of recreational, physical-education and sports facilities, in-kind contributions for cultural or sporting events, etc.; exempt up to one-half of the average wage for the calendar year).

From 2026, to qualify for exemption, the leisure benefit must not replace salary, wages, remuneration, or compensation for lost income. In other words, only benefits provided on top of regular pay (including remuneration under agreements outside employment) will remain tax-exempt. This change is intended to discontinue the practice used by some employers – “salary swap” or “bonus swap” – which the Supreme Administrative Court confirmed in its decisions last year.

If you provide such benefits, we recommend reviewing the terms to ensure they continue to qualify for tax exemption from 2026. Should you need our assistance, including alignment with the Financial Administration’s published guidance, please contact us.

III. Further changes to the taxation of employee stock and option plans (ESOP)

There have been several recent changes to the tax aspects of ESOPs, covered in earlier newsletters. The Companion Act to JMHZ introduces another amendment: from 2026, employee stock and option plans are favourably adjusted for certain employers – referred to during the legislative process as support for “start-ups”. The new rules apply only to certain entities – qualified employers and qualified employees.

A qualified employer is one that meets statutory conditions, including maximum turnover not exceeding CZK 2.5 billion and total assets not exceeding CZK 2 billion.

A qualified employee is defined by law; conditions include that the aggregate of the employee’s “qualified” holdings in the employer does not exceed 5% of the share capital and that the employee’s service with the employer will last at least 12 months (between option grant and exercise). The employee’s income must be at least 1.2x the monthly minimum wage.

The core change is a new tax treatment of income from exercising qualified employee options. If the statutory conditions are met, the gain will no longer be treated as employment income, but as “other income”. A key consequence is that the gain will not be subject to social security or public health insurance contributions.

IV. Extension of filing deadlines related to top-up taxes

Beyond the changes adopted via the Companion Act to JMHZ, the Act No. 316/2025 Coll. was published in the Collection of Laws and International Treaties, amending, among other things, the Top-Up Taxes Act. Recall that the top-up tax concept (also known as Pillar Two) aims to ensure that large multinational groups are subject to a minimum 15% tax on their profits.

The comprehensive amendment to the Top-Up Taxes Act also extends certain deadlines. The original deadline for filing the tax return and the information return for top-up taxes was 10 months; for the 2024 calendar year this meant end-October 2025.

Under the amendment, the deadlines change as follows:

1, The information return must now be filed within 15 months after the end of the tax period (or 18 months for an initial period). For the 2024 calendar year, the deadline is extended to 30 June 2026.

2, The top-up tax return must now be filed within 22 months after the end of the tax period. For the 2024 calendar year, taxpayers must file by 31 October 2026.