Draft Amendment to the Real Estate Transfer Tax Act
The Ministry of Finance of the Czech Republic disclosed information on the new pending draft Real Estate Transfer Tax Act, which addresses the basic topics of the new law. The Act is anticipated to take effect on 1 January 2014.
The need for new real estate transfer tax rules results from the contemplated transformation of inheritance and donation tax into the Income Tax Act, responds to the recodification of private law, and adjusts to rules applicable to such tax in developed European countries.
In response to the new Civil Code, the draft includes certain rights within immovable things (such as the right to build) and takes into account that a building constitutes a component of the land. The draft further assumes that the transferee shall be the payer of the transfer tax rather than the current transferor – this applies to transfers where consideration is paid. As a result, the tax guarantor will cease to exist, and an expert report will no longer be required for many transfers. The draft bill further updates the provisions applicable to tax exemptions and the foreign currency-to-CZK conversion rules.
In connection with the new draft real estate transfer tax act, we would like to remind you that the tax will increase from 3% to 4%; having received the Czech Government’s approval, the increase will apply as of 1 January 2013.
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