Although the major amendment to the VAT Act was already adopted at the end of the last year, some passages will only become relevant in the middle of this year.

In particular, the rules for taxation of immovable properties are changing from July 1, 2025. There is a shortening of the time test for VAT exemption on the supply of immovable property (from 5 years to 2 years), with the time test only being applied to the first supply. All subsequent sales will be exempt from tax, without the right to a deduction. There are also changes in the application of VAT rates and in the assessment of the type of buildings in relation to the Registry of Territorial Identification, Addresses and Real Estate (abbreviated as RÚIAN in Czech).

It will also be necessary to address the so-called additional taxation (reduction of tax deduction) of liabilities overdue by more than 6 months. Although this new provision has been in effect since January 1, 2025, it only applies to transactions with a date of effecting of taxable transaction in 2025 and beyond; therefore, it is only relevant now.

We expect that in the coming weeks, the Financial Administration will provide more detailed information on how to proceed in more complex cases and it will clarify some interpretive ambiguities.

We will inform you about further developments in due course.