From 1 January 2026, a number of changes to tax and related legislation came into force. It is not a single comprehensive reform, but a set of partial amendments introducing adjustments, especially in the area of income tax, value added tax, accounting, and related administrative obligations.
Changes to existing employee stock and option plans
There are two important adjustments to the existing employee stock and option plans:
Qualifying employee options will receive a special tax regime
The amendment introduces a new institute of qualified employee options and sets out precise rules on who can be a qualified employer, qualified employee, and what shares can be the subject of an option. It is a special regime designed especially for start-ups and smaller innovative companies. The most important effect of the new regulation is that income from the exercise of a qualifying employee option corresponding to the increase in the value of the share between the moment of granting the option and its exercise or financial settlement is not considered to be income from employment. This part will not be taxed as income from employment, but as other income under Section 10.
In practice, this means a more favourable regime, because this income will not be part of the regular salary and will not be subject to compulsory social security and health insurance contributions.
The sale of shares and securities acquired under qualifying options will not be exempt
The new tax regime for options is balanced by the fact that the sale of shares or securities acquired through the exercise of a qualifying employee option is not subject to the standard holding periods for exemption, i.e. five years for shares and three years for securities.
The CZK 40 million limit for tax exemption on the sale of securities and shares is being abolished
As of 1 January 2026, the restriction according to which the exemption of income from the sale of securities and shares in business corporations was limited to a total amount of CZK 40 million per tax period has been abolished. Therefore, if the legal conditions for exemption are met, this exemption will no longer be limited by the specified limit.
For cryptoassets, on the other hand, the CZK 40 million limit applicable to the exemption of income from their sale remains unchanged.
Clarification of the tax regime for employee benefits
The amendment responds to the case law of the Supreme Administrative Court, which allowed for a broader interpretation allowing for the exemption of non-monetary benefits that in fact fulfilled the function of benefits in kind forming part of remuneration. The Income Tax Act now explicitly stipulates that the exemption applies only to non-monetary benefits that are not wages, salaries, remuneration or compensation for lost income.
The result is a confirmation of the concept according to which real benefits provided in addition to remuneration for work, not payments substituting remuneration, should be exempt from tax.
In practice, common tax-advantaged benefits, such as contributions to sports, culture, health or recreation, will still be maintained, but it will be necessary to assess more carefully whether a particular benefit really constitutes a benefit or whether it is actually part of remuneration for work.
Interest deduction for housing cooperative loans
A new development is the expansion of the types of interest that can be deducted from the tax base. Starting with the 2026 tax year, it will be possible to deduct interest on loans taken out by a housing cooperative, provided that the interest corresponds to the taxpayer’s share and other legal conditions are met.
This option is aimed at members of housing cooperatives who effectively finance their housing needs through the cooperative. The annual deduction limit remains at CZK 150,000 per jointly managed household. To claim the deduction, it will be necessary to provide relevant certificates from both the cooperative and the lending financial institution.
Donations and Lex Ukraine
Also for the 2026 tax period, the increased limit for deducting the value of gratuitous benefits remains unchanged, up to 30% of the tax base. Some tax measures related to the war in Ukraine are also continuing, including the possibility of preferential tax treatment for certain forms of assistance.
Link to the minimum wage
A number of provisions of the Income Tax Act are linked to the minimum wage or the average wage. From 1 January 2026, the minimum wage will increase to CZK 22,400, which automatically increases some related limits. This has a practical impact, for example, in the case of the child tax bonus, where the minimum amount of the taxpayer’s own income is decisive for its entitlement. For 2026, it will be necessary to achieve income of at least CZK 134,400.
Unified Social Benefit and Spouse Tax Credit
As of 2026, there are significant changes to the social support system. A new Unified Social Benefit (“superdávka”) replaces four existing benefits: the child allowance, housing benefit, living allowance, and housing supplement. For income tax purposes, it is essential to note that this new Unified Social Benefit will not be included in a spouse’s own income when determining eligibility for the spouse tax credit. The own income threshold of CZK 68,000 remains unchanged.
Uniform monthly employer report
One of the most significant changes in 2026 is the introduction of a single monthly employer’s report, which represents a transition from the current model of annual summary reporting to continuous monthly individualized reporting of employee income data and tax advances. Instead of the current emphasis on the annual reconciliation, the tax withholding agent will now file an advance tax report for the advance payment, exclusively through the employer’s single monthly report. In this report, the tax withholding agent will state the advance payment for each taxpayer and other data necessary for tax administration.
Although the mandatory submission did not start until 1 April 2026, the entire system has been effective since 1 January 2026. In practice, this means that employers must prepare data from the beginning of the year so that they can also submit reports for January, February and March 2026 by 30 June 2026 at the latest. The new system unifies the existing reporting obligations towards several institutions (including, for example, the Labour Office) and is to contain tax, social security and statistical data.
From 1 April 2026, the registration obligations of employers towards the tax administrator will be abolished and registration will now take place through the Czech Social Security Administration. At the same time, a personal identification number is being introduced, which is to gradually replace birth numbers in communication between employers and state administration.
For the time being, the JMHZ does not change some of the existing obligations in the area of annual settlement or the issuance of certificates of taxable income.
Abolition of withholding tax on remuneration of non-resident members of corporate bodies
An important conceptual change is the abolition of withholding tax on the remuneration of members of corporate bodies, if these members are natural persons and at the same time tax non-residents of the Czech Republic. This income will now be taxed by way of advance tax.
This means a change not only in the method of taxation, but also in the related administrative obligations. If the income for the tax period exceeds 36 times the average wage (up to this amount, income is taxed at a 15% tax rate, above this limit it is 23%), the taxpayer will be obliged to file a tax return.
Withholding tax on current employment income
In the case of income from employment pursuant to Section 6 (4) of the Income Tax Act, the withholding tax regime is maintained. In 2026, withholding tax will be applied to agreements to perform work on a monthly income of less than CZK 12,000, unless the employee has made a tax declaration with the employer. For other income from employment, the decisive limit remains CZK 4,500 per month.
Advance tax and progressive rate
The basic structure of the calculation of advances remains unchanged, but in connection with the increase in the average wage, the threshold for the application of the 23% rate is shifted. In 2026, the rate of 15% will be applied up to the amount of CZK 146,901 per month, and above this threshold, the rate of 23% will apply.
Gratuitous benefits, i.e. gifts
In connection with the gratuitous benefit provided pursuant to Section 20 (8) of the Income Tax Act, it is necessary to pay attention to the newly introduced obligation for legal entities to attach to the tax return documents for individual donations that they claim as an item reducing the tax base.
Our article is generally about the new developments effective in 2026, but this obligation already applies to 2025. For tax periods starting in 2025, it is not sufficient to state only the total amount in Table G of Annex No. 1 in the corporate income tax return, but each individual donation must be accompanied by a document showing the date on which it was provided, recipient, value, subject matter and purpose of the benefit. In practice, it will most often be a confirmation issued by the recipient of the gift in PDF format, or a donation agreement.
At the same time, it should be borne in mind that the total size of attachments to the return is limited to 10 MB. If this limit is not sufficient for attachments, other documents can be sent separately in a follow-up general submission.
For the 2026 tax period, the increased limit for deducting the value of gratuitous benefits also applies to legal entities, up to 30% of the tax base.
Significant changes to the R&D deduction
From 2026, the rules for applying the deduction to support research and development are changing. The current structure linked to the increase in expenditure between periods is being abolished. It is now possible to apply a 150% deduction for research and development expenditure up to CZK 50 million; for the part above this limit, the deduction remains at 100% of the costs incurred. At the same time, the amendment introduces the concept of a “deduction group”, i.e. a group of related parties, at the level of which the limit of CZK 50 million will be assessed cumulatively for the increased 150% deduction rate.
The deduction is now not tied only to the current period and, in the case of a low tax base or tax loss, to the three following periods. The taxpayer will be able to decide whether to apply the deduction in the period of its occurrence or in one of the five immediately following periods.
In addition to parametric changes, the amendment also seeks to reduce the administrative burden. The obligation to provide data on the qualifications of persons and the form of their employment relationship with the taxpayer has been removed from the project documentation, as these facts can be verified from other documents.
Possibility of transferring tax withholding obligations for certain copyright income paid abroad
The amendment allows income payers to contractually transfer the tax withholding agent’s obligations to another entity, typically an agency that mediates the payment, for some copyright income flowing abroad.
Allowances for receivables
The amendment to the Reserves Act increases the limit for so-called insignificant receivables, for which a 100% statutory allowance can be created. The current limit of CZK 30,000 will increase to CZK 50,000 from 1 January 2026. The change concerns the creation of a statutory allowance posted or recorded after 31 December 2025.
In 2026, the legislative changes of 2025, which have significantly narrowed the range of accounting entities with financial statements that are mandatorily audited, will have a practical effect. In its current wording, the mandatory audit remains only for accounting entities that are subject to special legislation, as well as for large accounting entities (with the exception of selected accounting entities that are not public-interest entities) and medium-sized accounting entities. The practical impact is that small accounting entities are no longer subject to mandatory audit under the Accounting Act.
This change may also be reflected in the tax area, especially in the deadline for filing income tax returns, because taxpayers with a mandatory audit are also entitled to an extended deadline of up to six months.
From 1 January 2026, another part of the extensive amendment to the VAT Act will come into force. This stage focuses mainly on tax refunds to specific eligible entities, the new rules governing unduly paid tax, tax refunds to foreign persons and clarification of the rules for the export of goods in passengers’ personal luggage.
Abolition of the exemption of certain financial activities
From 1 January 2026, exemptions for certain financial activities have been abolished in the VAT Act. Specifically, debt collection services, the keeping of records of investment instruments, and the collection of television and radio licence fees are no longer exempt from VAT. The practical impact of this change will have to be assessed especially for entities operating in the financial and investment sector.
New regulation of refund of unduly paid tax
One of the most significant changes from 1 January 2026 is the change in the refund of unduly paid VAT. It is now explicitly stipulated under what conditions the recipient of the supply may make a claim. At the same time, the law states that a tax refund is possible only if other conditions are met, in particular if the supplier did not carry out the correction himself, the tax was legally determined and paid, and the recipient has exhausted reasonable means of recovering the amount from the supplier. It is therefore a more detailed and procedurally precise regulation.
Changes to tax refunds to beneficiaries of privileges and immunities
The rules for tax refunds to beneficiaries of privileges and immunities, in particular diplomatic missions, consular offices, international organisations, European Union entities and their authorised staff, are also being significantly changed. The new regulation defines the circle of entitled persons more precisely, sets the limits of the refunded tax according to the type of entity, regulates a special regime for tax refunds for the acquisition of passenger cars and unifies the procedural rules for making a claim. At the same time, more precise rules are introduced for documents, deadlines and territorial jurisdiction of the tax administrator.
New regulation of tax refunds to foreign persons
Another important change is the new system of tax refunds to foreign persons. The amendment newly distinguishes between tax refunds based on the principle of reciprocity and tax refunds to a foreign person when acquiring goods from another Member State or when importing goods. The changes bring a more precise definition of the conditions for the creation of a claim and new deadlines for filing a claim.
Modification of the TAX FREE regime when goods are exported by a traveller
From 1 January 2026, the rules for tax refunds for the supply of goods to a traveller for export in their personal luggage are also changing. The amendment regulates in detail the new procedure for issuing a proof of sale and its registration through the information system.
The main changes include the obligation of the VAT payer to issue a proof of sale at the request of the passenger, electronic notification of data to the information system of the Customs Administration, linking the tax refund to the confirmation of the exit of goods from the territory of the European Union and a more precise regulation of the deadlines for making a claim.
Mandatory contribution to retirement savings for high-risk professions
Employers are now obliged to contribute to pension products for selected employees performing level III risky work if the employee meets the legal conditions and applies for the contribution. The amount of the contribution is 4% of the social security assessment base. This contribution will be counted towards the statutory annual limit of CZK 50,000 for the tax exemption of employers’ contributions to old-age savings products.
Travel allowances and meals
From 2026, the rates of travel allowances will increase, the basic compensation per kilometre of driving and the average fuel prices will change. The lump-sum compensation for remote work is CZK 4.70 per hour. At the same time, the limit of the exempt contribution for employee meals is also increased to CZK 129.50 per shift.
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