Real Estate Transfer Tax and VAT – Information of Tax Administration

The Tax Administration of the Czech Republic published the information about the change of the official approach to the determination of the tax base in respect of the real estate transfer tax on Friday, 24 November 2017. As the reaction to the current decisions of the Czech Supreme Administrative Court the Czech Tax Administration officially accepted that VAT (in case the transfer of the real estate is subject to VAT) shall not be included in the basis for the assessment of the real estate transfer tax.

In practice, the taxpayers can submit the additional real estate transfer tax returns for the lower tax liability. The tax office consequently returns the portion of the real estate transfer tax corresponding to the amount of VAT levied on the transfer of the real estate.

The real estate transfer tax can be corrected only if the period for the correction of the tax has not lapsed, i.e. usually in the period of three years. E.g. the real estate transfer tax paid in respect of the acquisition of the real estate entered in the real estate cadastre in August 2017 can be made until the end of November 2017.

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