Czech Republic: VAT and leases of residential real estate

Czech Republic: VAT, leases of residential real estate

A provision of the value added tax (VAT) law concerning the VAT imposed on leases of selected real estate is effective 1 January 2021.

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The leasing of real estate is (with certain exceptions) exempt from VAT, and without the ability to claim a VAT deduction. Until 31 December 2020, VAT taxpayers could elect to declare output VAT on real estate leased to another taxpayer for purposes of that other taxpayer’s economic activity.

Effective 1 January 2021, VAT no longer applies to leases of certain real property (in general, residential property).

The primary purpose of this provision is to address perceived abuses by claiming the entitlement to VAT deduction when the real estate is intended for housing. Buildings for housing are determined based in part on information from the real estate register.

Any adjustment to VAT-related deductions for buildings, units, and their technical improvements must be performed within 10 years of their acquisition.


Read a January 2021 report prepared by the KPMG member firm in the Czech Republic

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