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Property Tax
Michal Radvan

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Legal Basis for Taxation
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n Act no. 338/1992 Sb., Act on Tax on Immovable Property (Real Estate Tax Act), as amended
n
n Civil code Act no. 89/2012 Sb. brought some changes also for taxation in legal act mentioned
above
n Main change – superficies solo cedit
n

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Objects of Taxation
n Even the Act on Tax on Immovable Property divides this tax de iure into two parts (land tax and
building/flat tax), according to specifics of the structural items it is better to divide the tax
into three, respectively four parts – land tax, building tax, flat tax and very similar to the last
one non-residential premises tax.
n It is necessary to count every tax for every real estate separately. The total sum of these taxes
is the final real estate tax written down in one tax return.

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Land Tax
nThe object of land tax is created by the lands in the territory of the Czech Republic registered
in the land register. But the land tax is not imposed on some lands; they are although registered
in cadastre:
nLands within the area of the ground plan of building which is built on;
nWoodlands, if they involve preventive forests and forests of special determination;
nWater-covered areas, except ponds used for commercial fish-farming;
nLands used for defense of the state.
nLands under the residential buildings (this land is part of the flat tax)
nAll the other lands are liable to tax:
nAgricultural lands like arable land, hop-fields, vineyards, gardens, orchards and permanent grass
growth;
nCommercial forests;
nPonds used for fish-farming;
nBuilt-up areas and courtyards;
nDevelopment lands;
nFlat structures (new in 2012!!!);
nOther areas (playing fields, bathing places, cemeteries, etc).

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Building Tax
nThe objects of taxation are the buildings and a civil engineering structure (listed in the Annex
to the Act on Tax on Immovable Property) and dwelling units in the territory of the Czech Republic
connected to the land with fixed foundations. These buildings must have an acceptance certificate.
There is a group of several more buildings that are liable to tax:
nBuildings that are used even if there is no acceptance certificate (but it should be);
nBuildings that are used even if there is no acceptance certificate but the building owner has a
permission to use them;
nBuildings for which the acceptance permission was not necessary but now it is.
nOther buildings, especially small-sized buildings, are not liable to buildings tax, so that the
land under them is liable to land tax. Some other buildings are not levied as buildings, as well as
the land under them is not levied on lands. These are:
nBuildings including flats or non-residential premises (they are liable to flats and
non-residential premises tax);
nWater dams and other structures used to regulate water flows, water conduits and sewerages, city
waste water treatment plants;
nEnergy distribution structures;
nPublic transport structures (roads, highways, railways, airports, ports, etc);
nFlat structures.

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Flats and Non-Residential Premises Tax
n Only flats and non-residential premises registered in the Real Estate Cadastre are liable to tax.
Buildings, in which flats and non-residential premises are objects of taxation, are not liable to
buildings tax.

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Major Exemptions
nPublic interest, ecological aspects and international treaties
nReal estate owned by state, municipalities, regions and diplomatic representatives
nReal estate owned by churches, schools and universities, museums and galleries, hospitals, etc.
nAgricultural lands for five years and woodlands for 25 years after recultivation
nReal estate affected by a natural disaster for a period up to five years (depends on opinion of
municipality)
nStructures used in public passenger transport
nAgricultural lands except gardens, if the municipality decides so
nNewly-constructed residential buildings and flats in newly-constructed residential buildings owned
by individuals for 15 years after the issue of an acceptance certificate; abolished in 2009
nCultural monuments for eight years after the year following the year when a building permit was
issued for alterations undertaken by the owner
nStructures where the heating system was converted from use of solid fuels to more ecological fuel
for five years; abolished in 2009, but to be used in 2012 for the last time

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Taxpayers
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nIn most cases the taxpayer of the land tax is the owner of the land.
nLeaseholder
nUser
nBuilder (while taxing civil engineering structure)
n
nProblems of legal liability
nProblems of co-ownership was basicly solved - Newly tax administrator assess TAX ex officio in an
amount corresponding to the proportion of the co-owners of real property without a prior call for
filing tax returns.

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Tax Base
nLand Tax:
nAgricultural lands (arable land, hop-fields, vineyards, gardens, orchards and permanent grass
growth) - the price of land determined as a multiple of the actual area of the land in square
meters and the average price per square meter of the land laid down in a decree.
nCommercial forests and ponds used for fish-farming - the taxpayer can choose, what is better for
him: whether to use the price of the land as determined pursuant to the price regulations valid on
1 January of the taxable period or the actual area in square meters multiplied by 3,80 CZK.
nOther lands (built-up areas and courtyards, development lands, flat structures and other areas) -
the actual area of the land in square meters, as ascertained on 1 January of the taxable period.
nBuilding Tax:
nBuilt-up area in square meters as on 1 January of the taxable period.
nFlats and Non-Residential Premises Tax:
nSo called adjusted floor area - the floor area of the flat or non residential premise in square
meters as on 1 January of the taxable period, multiplied by a coefficient of 1,20 (non-residental
premises) or 1,22 (flats).

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Tax Rates – Land Tax
nAgricultural lands such as arable land, hop-fields, vineyards, gardens, orchards and permanent
grass growth - lower (0,25 %) for permanent grass growth (they have lower productivity), higher
(0,75 %) for the other agricultural lands.
nCommercial forests and ponds used for fish-farming - 0,25 %.
nOther lands (built-up areas and courtyards, development lands and other areas) - different for
built-up areas and courtyards and other areas (0,20 CZK per square meter ) and for development
lands (2 CZK per square meter, regulated (multiplied) by a coefficient called location rent (1,0 –
4,5) according to the number of inhabitants; municipality can increase or reduce a basic
coefficient by a generally binding ordinance). In case of flat structures it depends for what kind
of business are they used: for forestry, agriculture or water management - 1,00 CZK per square
meter, for industrial production, civil engineering, transport, power and other agricultural
production, and for other business activities - 5,00 CZK per square meter.
nThe final tax (excl. arable land, hop-fields, vineyards, orchards and permanent grass growth) can
by multiplied by the local coefficient at 2, 3, 4 or 5 assessed by a generally binding ordinance.
This resolution depends on the municipality.

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Tax Rates – Building Tax
nRresidential buildings - 2 CZK per square meter of a built-up area; increased by 0,75 CZK per each
additional above-ground floor (so called increased tax rate); multiplied by a location rent – a
coefficient according to the number of inhabitants (the municipality can increase or reduce a basic
coefficient by a generally binding ordinance).
nOther structures that provide facilities for residential buildings - 2 CZK per square meter of a
built-up area, only for the area which is in excess of 16 square meters; increased by an increased
tax rate; multiplied by a location rent.
nHouses and family houses used for individual recreation - 6 CZK per square meter of a built-up
area; increased by an increased tax rate and by so called municipal coefficient (1,5 – assessed by
a generally binding ordinance); if such houses are located in national parks or first-category
protected countryside zones, there is another coefficient of 2,0 that shall be used.
nOther structures that provide facilities for houses and family houses used for individual
recreation - 2 CZK per square meter of a built-up area; increased by an increased tax rate, by a
municipal coefficient and if such structures are located in national parks or first-category
protected countryside zones, the coefficient at 2,0 shall be used.
nGarages constructed separately from residential buildings - 8 CZK per square meter of a built-up
area; multiplied by a municipal coefficient.
nStructures for business activities - depends on the type of business activities:
n2 CZK per square meter of a built-up area for structures used for primary agricultural production,
forestry and water management,
n10 CZK per square meter of a built-up area for structures used for industrial production, civil
engineering, transport, power and other agricultural production,
n10 CZK per square meter of a built-up area for structures used for other business activities.
nThe standard tax rate shall be increased by an increased tax rate and by a municipal coefficient.
nOther structures - 6 CZK per square meter of a built-up area; increased by an increased tax rate.
n
nThe final tax can by multiplied by the local coefficient at 2, 3, 4 or 5 assessed by a generally
binding ordinance. This resolution depends on the municipality.

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Tax Rates – Flats and Non-Residential Premises Tax
nFlats - 2 CZK per square meter of the adjusted floor area; multiplied by a location rent.
nNon-residential premises for business activities:
n2 CZK per square meter of the adjusted floor area for non-residential premises used for primary
agricultural production, forestry and water management,
n10 CZK per square meter of the adjusted floor area for non-residential premises used for
industrial production, civil engineering, transport, power and other agricultural production,
n10 CZK per square meter of the adjusted floor area for non-residential premises used for other
business activity.
nThese standard rates shall be multiplied by the municipal coefficient of 1,5.
nNon-residential premise is used as a garage - 8 CZK per square meter of the adjusted floor area;
multiplied by the municipal coefficient of 1,5.
nNon-residential premise is used for anything else - 2 CZK per square meter of the adjusted floor
area; multiplied by a location rent.
nThe final tax can by multiplied by the local coefficient at 2, 3, 4 or 5 assessed by a generally
binding ordinance. This resolution depends on the municipality.
n
nIn general the amounts are minimal and depend on the location and the size of the property. For
example an apartment of the size 100 m² in the centre of Prague will be taxed at approx. 1 000 CZK
/ € 40 a year

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Budget Revenue
n The revenue from the real estate tax is the income of the municipality in whose district is the
real estate situated.
nReal Estate Tax revenue aprox. 400 mil. EUR
nReal Estate Tax revenue as percentage of local tax revenue aprox. 5 %
nReal Estate Tax revenue as percentage of total tax revenue to central and local government aprox.
1,5 %

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Tax Administration
nSo-called autoaplication is used.
nIt means that taxpayer calculates the tax using correct tax base and tax rate, he must file the
tax return by 31 January of the taxable period and write there all the information about the
taxpayer and about the real estate (kind of real estate, its location, legal relationship, area of
real estate, way of its use, possible exemption etc.). In fact, the tax return is not necessary to
be filed every year; usually if the tax return was filed in any of the previous taxable period and
there are no changes, the taxpayer does not have this duty. Even if there are changes in the tax
rate, in the average price of land, in the coefficients, etc., there is no duty to file the tax
return.
nThe real estate tax is assessed according to the situation as on 1 January of the calendar year of
which it is assessed (no matter if there was a duty to file the tax return or not in that calendar
year).

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Control
nIn case of disposing with the real property, the contract must be sent to the cadastre office and
real estate transfer tax must be paid to the financial office. It means that the cadastre office
knows all the details about the real estate and the taxpayer and both the cadastre office and the
financial office know the price of the property.

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Tax Payments
n After assessing the tax, the financial sends a post money order with the amount of tax to every
taxpayer – natural person.
n If the annual real estate tax does not exceed 5 000 CZK, it shall be payable in one payment no
later than 31 May of the current taxable period. If the tax exceeds 5 000 CZK, it shall be payable
in two equal installments no later than 31 May and 30 November. The taxpayers engaged in farming
and fish-farming have to pay the tax in two installments no later than 31 August and 30 November.

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Conclusion?
nLegal regulation of real estate taxation in the Czech Republic is not perfect. The most discussed
thing is whether to change the tax base – to replace existing unit taxation to ad valorem taxation.
The tax base should correspond with the market value of the real estate. The value should be set by
municipalities that have the best knowledge about the prices in their territory without any experts
or assessors. The value can be used for transfer taxes or inheritance proceedings, too. The
municipalities can create the map of value zones for the purpose of the real estate tax base. If
anybody is not satisfied with the price of his real estate set by the municipality, he should have
the possibility to appeal to the local financial office.
nThe municipalities should have the right to set the tax rate but in the act there should be some
interval (for example 0,05 – 0,5 %).  The other (usually higher) tax rate should be applied on
development lands and the real estates serving for running business. Lower tax rates can be used
for the real estates like family houses and flats for living.
nThe municipalities should be the only real estate tax administrators.
nThe taxpayer should in his tax return complete just identification data necessary to set the tax
base. The tax administrator´s task should be to control the information through the real estate
cadastre, set the tax base, calculate the tax and assess it.
n
n Everything mentioned above would fill one of the most important principles of the tax law –
principle of effectiveness: the tax administration would not trouble the taxpayers too much but it
should reach the aim of the proceedings, it means assess and collect the taxes not to cut the tax
incomes.
n→ fiscal autonomy and information to taxpayers
n

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nThank you for your attention