Rowan Legal
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Foreigners can own and occupy real estate in the Czech Republic without restrictions. Both individuals and legal entities, regardless of nationality, are permitted to purchase real estate, including shares in real estate-owning companies. The Czech Republic offers an open market for foreign investment.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
Foreign companies face no specific restrictions on obtaining loans for purchasing real estate in the Czech Republic. However, non-EU companies might encounter stricter scrutiny or additional documentation requirements from banks.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
When buying real estate in the Czech Republic, following fees and costs apply (besides the purchase price):
- Registration Fees: The fee for a registration of the property with the Land Registry is CZK 2,000 (approximately EUR 80). If the registration is submitted electronically (via data box or cadastral portal), there is a 20% discount on the fee.
- VAT: Generally, delivery of the immovable property is exempt from VAT without right to deduct. VAT may be applicable in some cases, for instance in case of delivery of a building plot or delivery of an immovable property within two years of its completion or substantial change.
Currently, there is no real estate transfer tax as it was abolished in 2020.
These costs might also include agent fees and costs of legal services for contracts preparation and for due diligence. Such costs can vary based on the specifics of the transaction.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Yes, owning real estate in the Czech Republic incurs property taxes, but these are low compared to other European countries. Owners must pay an annual real estate tax, calculated based on the property's size, location, and type. Additionally, rental income is subject to income tax, and VAT may apply to commercial leases.
The burden of some taxes may be contractually transferred to tenants or occupiers. This practice is common in business leases but not typically applied to residential leases. Regardless, the legal responsibility for paying these taxes remains with the property owner.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
The Czech Republic does not offer specific tax breaks or incentives exclusively for foreigners buying real estate. However, general incentives are available to all property buyers, including foreigners. For example, individuals can deduct mortgage interest payments from their taxable income, subject to certain limits. Additionally, if a property is held by an individual for more than ten years (shorter period may apply in some cases), the capital gains from its sale are exempt from tax.
How is the ownership of Real Estate evidenced in your jurisdiction?
In the Czech Republic, real estate ownership is evidenced through registration in the Land Registry. This public registry records detailed information about properties, including ownership, liens, and other rights.
When a property transaction occurs, the new ownership must be registered in the Land Registry to be legally recognized. The registration process involves submitting a proposal for entry, along with supporting documents such as the purchase contract, to the relevant cadastral office. Once registered, the ownership information is publicly accessible, ensuring transparency.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
In the Czech Republic, the identity of real estate owners is publicly accessible through the Land Registry. While direct confidentiality is not possible, owners seeking privacy often use legal entities, such as limited liability companies or joint-stock companies, to hold the property. This method can provide a degree of anonymity, as the property is registered under the entity's name rather than the individual's. However, even with this approach, the ultimate beneficial owners might still be identifiable through other corporate disclosure requirements.