This represents the most extensive modernisation of Czech accounting legislation and related legislation in taxes, commercial law, transformations, etc., in decades. It aims to increase the quality and comparability of accounting information, reduce administrative burden and align Czech accounting more closely with International Financial Reporting Standards (IFRS). The accompanying act, which addresses changes to the relevant legislation outside the Accounting Act itself, amends more than 140 regulations and thus covers a substantial part of the legal system.

New Accounting Act

This is already the sixth version of the draft of the new Accounting Act, which, compared with the fifth version published in July 2025, has undergone a number of changes. Certain parts have been rearranged and the wording in several areas has been refined and supplemented.

Below is a brief overview of the main changes that the draft of the new Accounting Act (NAA) introduces compared to the current Accounting Act (CAA).

• The regulation in the new Accounting Act focuses primarily on accounting reporting (i.e., the output of keeping the books and preparing financial statements), rather than on regulating the bookkeeping process itself.
• The second part of the NAA is devoted to the conceptual framework, which the CAA lacked. The conceptual framework first sets out the objectives of financial reporting and the requirements for useful accounting information (relevance, faithful representation, timeliness, verifiability, understandability and comparability). It also defines the elements of financial reporting, not only the basic ones (asset, liability, equity, income and expense) but also others (receivable, right‑of‑use asset, financial instrument, derivative, crypto‑asset, cash equivalent, reserve (or provision in IFRS terminology), non‑current and current asset, tangible, intangible and investment asset, long‑term and short‑term liability). In addition, the principles for preparing financial statements are set out in more detail than in the CAA.
• The scope of reporting entities that will use International Financial Reporting Standards as adopted by the European Union (IFRS Accounting Standards) will be expanded. The obligation to report under IFRS will apply to most financial institutions and to insurers; Regulations Nos. 501/2002 Coll. and 502/2002 Coll. will be repealed without replacement.
• There are several changes regarding consolidation in the NAA. For example, the proportionate consolidation method has been abolished and the method for determining the equity‑accounted amount has been changed; it will now be used not only to measure an investment in an associate but also in a jointly controlled entity. A new rule is that a parent entity that is not a public‑interest entity will determine its category of reporting entity based on the size criteria of its consolidation group. For example, a parent of a medium‑sized consolidation group will, in its separate reporting, be subject to the obligations applicable to medium‑sized entities.
• Significant changes will occur in lease reporting (leases of real estate, tangible assets, all lease agreements) – for medium‑sized and large entities, the implementation of IFRS 16 requirements will be mandatory for both lessees and lessors; simplified recognition and measurement rules are set for the others (recognition of a right‑of‑use asset and the related lease liability for lessees, and a finance lease receivable for lessors).
• The draft NAA allows the accounting currency of an entity to be any foreign currency, provided it is also its functional currency. It should be noted that as of 1 January 2024 the amendment to the CAA came into effect, allowing the functional currency (i.e., the currency of accounting) to be only the euro, US dollar or British pound, in addition to the Czech koruna. Under the NAA, any foreign currency may be used provided it is not hyperinflationary. The draft also introduces a presentation currency, i.e., the currency in which financial statements are presented. This makes it possible, when preparing consolidated financial statements, to choose a different currency than that in which the separate financial statements are prepared.
• Revenue recognition will align more closely with the IFRS approach (e.g., for long‑term projects, arrangements in which the entity acts as an agent, and contracts with more than one performance obligation). The act will define the moment of revenue recognition and how to determine its amount for multiple‑element contracts.
• Measurement will now be distinguished as initial or subsequent. For medium‑sized and large entities, the use of present (i.e., discounted) value for long‑term receivables and liabilities will be mandatory; for other entities, it will be optional. The replacement cost as a measurement basis is abolished; instead, fair value will be used for initial measurement. The set of assets and liabilities measured subsequently at fair value is expanded compared with the CAA to include certain additional financial assets and non‑financial investment assets for which an active and liquid market exists.
• There are several changes regarding the measurement of tangible assets. The initial carrying amount will be reduced by depreciation and subsequent impairment (under the CAA: provisions (allowances in IFRS terminology) and increased by subsequent improvements (under the CAA: technical improvements). Taking residual value into account in depreciation will be mandatory. A revaluation model for non‑current tangible assets is newly permitted (similar to the revaluation model under IAS 16), but not for intangible assets. Grants for the acquisition of tangible assets will no longer reduce the carrying amount of non‑current tangible assets. A new definition of repairs and maintenance is introduced. Another change is the inclusion, in the cost of an asset on initial recognition, of dismantling and site restoration costs (the expected future outflows to remove the asset and restore the site where the asset is located).
• There are also major changes in the area of corporate transformations. For example, the “valuation difference on acquired assets” is abolished; the measurement and presentation of goodwill is newly regulated; remeasurement in transformations lacking commercial substance is effectively prohibited. The effective date of a transformation that falls within a financial year will no longer entail closing the current separate reporting period and starting a new one; instead, it will only be linked to interim financial statements and an opening balance sheet.
• In the area of reporting information outside the financial statements, the term “annual report” is no longer used in the NAA; its role is essentially taken over by the management report. The management report also includes a separate sustainability report, where certain requirements are relaxed in connection with the Omnibus initiative, as described in our previous posts, for example, in the article The European Parliament approved the Omnibus package.
• A significant change concerns natural persons: under the NAA, self‑employed individuals are not required to be reporting entities; they will become a reporting entity only based on their decision.
• The area of offences and fines has also undergone important changes.
• The effective date of the NAA is set at 1 January 2028. Technically, this date can only be achieved if the NAA and the accompanying act are approved and promulgated in the Collection of Laws during 2026, allowing for at least a 12‑month vacatio legis and giving reporting entities a sufficient time to prepare for the implementation of changes resulting from the new legislation.

Implementation regulation to the Accounting Act

Together with the new Accounting Act and its explanatory memorandum, updated Theses of the implementation regulation to the Accounting Act for entrepreneurs and not‑for‑profit entities were submitted. This 28‑page document, in addition to general provisions on financial statements and measurement, contains a more detailed section on the elements of financial statements. It is followed by special provisions on measurement and accounting methods (e.g., measurement of liabilities, subsequent impairment, alternative methods). After as‑yet‑unspecified transitional provisions, the structure of financial statements for businesses is included — the balance sheet and the profit or loss account, both by nature and by function. The structure of financial statements for nonprofit entities has not yet been published. Interestingly, in five cases, the theses refer directly to the wording of interpretations of the National Accounting Council or to procedures specified in particular IFRS/IAS standards, instead of providing detailed guidance.

These theses of the implementation regulation are certainly more detailed than their previously published version, but we are still awaiting the draft legal text of the regulation and, in particular, specific transitional provisions that will address the differences between accounting under the existing rules and under the rules based on the new Accounting Act — including the mandatory transition of many entities to reporting in accordance with IFRS Accounting Standards.

Accompanying Act to the Accounting Act

In the explanatory memorandum, this act is described as an “amending act”, because it introduces legislative‑technical or substantive changes in 148 different acts. The current version has 270 pages; together with the explanatory memorandum, the total amounts to 731 pages. The most important changes are identified in the Income Taxes Act and the Valuation Act. Given strong criticism from the professional public regarding many problematic provisions, especially in the Income Taxes Act, it is possible that the Ministry of Finance may seek to withdraw the accompanying act from the Chamber of Deputies for revision.

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Our team of experienced professionals will help you analyse the impacts and implement the changes — from accounting, tax and legal perspectives.

More information about the expected changes brought by the new Accounting Act can be found on the page New Accounting Act — Deloitte Czech Republic.

The full text of the proposed new Accounting Act and the accompanying act is available on the website of the Chamber of Deputies.