Changes in taxation of immovable property in 2025
On 1 January 2025, the second part of the amendment to the Real Estate Tax Act, which already in 2024 introduced numerous significant changes, entered into force. Below, we summarise the most important changes for this year.
As regards the land tax, the subject of the tax on forest land has been extended. From January 2025, any exclusion from the scope of the tax only applies to parts of land on which protective or special-purpose forests are located; until now, for an entire land plot to fall outside the scope of the tax, it was sufficient that such a forest be located on just part of the land. The methodology for calculating the tax base for taxable forest land has also changed, since now it can no longer be based on the price determined by pricing regulations but solely on the actual square area of the land multiplied by CZK 3.80. If any of these changes apply to you, you are obliged to file a tax return for 2025.
Changes in the exemption from tax concern land as well as structures and units. The law now sets restrictive conditions for claiming an exemption for taxable structures of and at railways, airways, waterways, and ports used in accordance with an issued permit for public transport. From 1 January 2025, only the parts of these structures and units used in public transport shall be exempt. Thus, if, e.g., a section of a railway station is rented out to a restaurant operator on 1 January 2025, that part of the building will not be exempt. Any changes in the extent of the exemption will also have to be reflected in the tax return for 2025.
Further changes to tax exemptions have been made for ecologically significant elements: these shall be exempted if they are listed in the register of ecologically significant elements under the act governing agriculture (previously, only selected elements were exempted). At the same time, the exemption for marshes, swamps, rock formations, etc. has been abolished. Taxpayers do not have to file a tax return due to the abolition of this exemption, as the conversion to the subject of the tax according to the type of land and its use as per the Real Estate Register shall be made automatically by the tax administration.
As regards the exemption of publicly accessible land, its definition is further specified as public spaces, publicly accessible sports grounds, and selected publicly accessible roads. Here as well, only the part of the land on which the public space, publicly accessible sports ground, or publicly accessible road is located may now be exempted. The restrictive condition that the exemption cannot be claimed if the land is used for business purposes, rented out or leased out remains in force. If this means a change in the scope of a tax exemption for a taxpayer, they must file a tax return for 2025.
Coefficients have also changed significantly from 2025. Firstly, the 1.5 coefficient whereby municipalities could increase the tax rate for holiday homes, garages, and structures and units used for business purposes has now been abolished.
Changes have also been made to local coefficients. For 2025, a municipality can set them between 0.5 and 5.0 (for agricultural land only between 0.5 to 1.5), at up to five levels. The first four levels (i.e. the local coefficient for the whole municipality; for individual cadastral areas; for an individual urban district or part; for an individual group of immovable property) will be set by the municipality by decree.
The fifth level will be the local coefficient for selected immovable property, which will be set by the municipality by a measure of a general nature. Unlike a decree, in the measure the municipality must state the reason for setting the coefficient and clearly identify the selected immovable property in accordance with the rules set out in the law. Taxpayers may defend themselves by raising objections or submitting comments against impending measures, or in court against already issued measures. For this reason, it is advisable to monitor the municipality's official noticeboard where measures must be published for comments before they are adopted.
A rather significant change concerns the population coefficient, both for building land and for selected structures and units. A municipality can no longer decrease but only increase the coefficient by one category. The number of inhabitants of the municipality to determine the basic coefficient amount shall now be based on the decree implementing the Act on Budgetary Determination of Taxes, as amended as at the first day of the taxable period (until now, the last census was used as a basis).
The inflation coefficient remains at 1 for 2025, i.e., it will not affect the amount of tax liability.
The good news is that the changes to the coefficients do not require taxpayers to file tax returns; the tax authority will take the changes into account when assessing the tax ex officio.
For the sake of completeness, here are examples of the most common circumstances that trigger an obligation to file a real estate tax return:
- acquisition or disposal of immovable property
- changes to selected data recorded in the Real Estate Register
- issuance of a final building permit
- reinforcement of land without a vertical load bearing structure
- commencement of the use of the building (regardless of the entry in the Real Estate Register)
- increase in the number of additional floors of a building.
If you are unsure whether the 2025 changes in real estate tax apply to you or if you are required to file a tax return for any other reason, please do not hesitate to contact us.