Discover the new Tax and Regulatory Rules for Businesses and Professionals in 2025
The year 2025 brings significant tax and regulatory updates that will impact businesses, freelancers, and self-employed workers. During a webinar hosted by the Italian-Czech Chamber of Commerce and Industry, Dr. Piero Giovannini outlined the main upcoming changes. These updates range from VAT modifications to changes in the flat-rate tax regime, as well as new regulations on cryptocurrencies and labor law.
If you are an entrepreneur, freelancer, or consultant, staying informed about these changes is essential to optimize your tax management and avoid penalties. In this article, you will find everything you need to know about the new 2025 regulations.
Continue reading to explore all the updates in detail.
VAT Changes: New rules for Businesses from 2025
Starting January 1, 2025, important VAT rule updates will come into effect.
New method for VAT Revenue Calculation
- The revenue threshold for VAT qualification will no longer be calculated based on a rolling 12-month period but rather on the entire calendar year (January 1 – December 31).
- If a business exceeds 2 million CZK in revenue in the previous year, it will become VAT-liable from January 1 of the following year.
- If the revenue exceeds 2,536,500 CZK, the VAT registration will be mandatory from the second day after exceeding the threshold.
Introduction of the Cross-Border Small Business Status (SME = Small Medium Enterprise)
From 2025, a new status called Cross-Border Small Business will be introduced. Businesses with revenue under 2 million CZK can register under this status and operate with EU counterparts VAT-exempt, just as they do within their domestic market.
- These businesses will receive a specific DIČ code with the prefix “EX” to distinguish their tax-exempt transactions.
- Similarly, cross-border small businesses from other EU countries with an “EX” identifier can conduct VAT-exempt transactions with Czech counterparts.
This simplification allows micro-enterprises engaged in cross-border trade to remain competitive in the European market without the burden of VAT registration.
Other VAT Modifications
- The national reverse charge will be extended to industrial and general cleaning services.
- Deduction of VAT on purchase of goods and services must be claimed within 2 years from the relevant date (and no longer 3 years).
- The deadline for correcting the taxable amount for an invoice included in a periodic VAT return will be extended from 3 to 7 years.
- Car VAT deduction: Possible modification or abolition of the 2,000,000 CZK deduction limit for company vehicles by 2027.
VAT on Real Estate Transactions (Effective July 1, 2025)
- First Sale VAT: A 21% VAT rate will apply only to the first sale of a completed property within 23 months of its approval or official authorization for use.
- Subsequent Sales: Any sales occurring after 23 months or subsequent resales will be VAT-exempt, with no right to deduct VAT on related costs.
- Substantial Modification Criterion: If a renovation increases a property’s value by at least 30% of its sale price, it will be classified as a substantial modification.
- If sold within 23 months after renovation, it will be subject to a 21% VAT.
- If sold after 23 months, it will be VAT-exempt.
- Reduced VAT for Social Housing: If more than half of a building’s total area is used for social housing, construction and renovation work will qualify for a reduced 12% VAT rate instead of 21%. The key condition for this reduction is that the building must be registered as social housing in the cadastral records.
- Taxation of Building Land: The sale of building land will remain subject to 21% VAT. The classification of “building land” will be based on municipal resolutions defining urban zoningor construction permits issued for building on the land.
Tax Declaration Individuals and Legal Entities 2025
The tax return for 2024 income must be submitted by the following deadlines:
- April 1, 2025 – For paper submissions.
- May 2, 2025 – For electronic submissions.
- July 1, 2025 – – For those who use a licensed tax advisor in Czech Rep.
New Capital Gains Tax Regulations (2025)
From 2025, the Czech Republic introduces new rules on the taxation of capital gains on sales of assets that are part of personal (non-business) wealth:
- Taxation: Capital gains will be included in taxable income and taxed at progressive PIT rates of 15% or 23%, with no separate capital gains tax.
- Exemptions: Capital gains from the sale of personal assets (not business-related) can be tax-exempt if they are not sold for speculative purposes and meet minimum ownership periods defined by law.
- New Annual Cap: A maximum threshold of 40 million CZK will apply to gross capital gains from share disposals. Any income exceeding this limit will be subject to standard progressive taxation.
This reform aims to regulate capital gains taxation while maintaining favorable conditions for long-term investors.
Determination of Taxable Income in 2025
No major changes were introduced to corporate tax regulations in 2025, but tax returns for 2024 will, for the first time, be subject to the 21% corporate income tax (CIT).
- CIT applies to all business profits, including permanent establishments of foreign companies.
- Partners in general partnerships and limited partnerships are taxed on their share of company profits.
- The only changes impacting corporate income taxation involve automatic adjustments based on increases in the average salary.
New Rules for Self-Employed Professionals (OSVČ) in 2025
The 2025 average salary is set at 46,557 CZK, impacting the calculation of contributions and taxationforself-employed individuals.
- Pension contributions: The minimum taxable base remains 55% of the total taxable income.
- Gradual increase in the minimum taxable base for the main self-employed activity:
- 30% of the average salary in 2024.
- 35% in 2025.
- 40% from 2026 onward.
These changes affect the calculation of social contributions and the threshold for applying the 23% tax rate.
Changes to the Flat-Rate Tax Regime (Paušální Daň) in 2025
Changes in Flat-Rate Tax Prepayments
From January 1, 2025, the flat-rate tax for self-employed workers will be updated, particularly affecting contributions and monthly prepayments.
- The first-tier prepayment amount will increase, while the second and third tiers remain unchanged.
- Payments must be made by the 20th of each month, with the option to pay in advance for multiple months or the entire year.
New Monthly Flat-Rate Tax Payments for 2025
| Category | Total Payment | Income Tax | Pension Contributions | Health Insurance |
| Tier I (Up to 1M CZK) | 8,716 CZK | 100 CZK | 5,473 CZK | 3,143 CZK |
| Tier II (1M – 1.5M CZK) | 16,745 CZK | 4,963 CZK | 8,191 CZK | 3,591 CZK |
| Tier III (Up to 2M CZK) | 27,139 CZK | 9,320 CZK | 12,527 CZK | 5,292 CZK |
Conditions for Accessing the Flat-Rate Tax Regime
A self-employed worker can join the flat-rate tax regime if they meet the following conditions:
- They are not subject to VAT and have an annual income of up to 2 million CZK.
- They do not receive employment income, except for those subject to withholding tax.
- They are not undergoing insolvency proceedings.
- They are not a shareholder in a joint-stock company or a limited partner in a limited partnership.
- In the previous year, their income must not have exceeded the selected flat-rate income bracket.
New Income Limits for Each Tier
From 2025, the income thresholds for the different flat-rate tax tiers will be updated.
| Tier | Annual Income Limit |
| Tier I | Up to 1 million CZK, regardless of the type of activity. If at least 75% of the income comes from activities with an 80% or 60% expense allowance, the limit increases to 1.5 million CZK. |
| Tier II | Between 1 and 1.5 million CZK, regardless of the type of activity. If at least 75% of the income comes from activities with an 80% or 60% expense allowance, the limit increases to 2 million CZK. |
| Tier III | Up to 2 million CZK, regardless of the type of activity. |
Updates on Cryptocurrencies and the New Law on CBD and Psychoactive Substances
Cryptocurrencies: New Regulations from 2025
The cryptocurrency market will be regulated by new laws that include:
- Supervision by the Czech National Bank to monitor operators and transactions.
- Fines of up to 50 million CZK for violations.
- Consumer protection, allowing forced execution in case of service provider failure.
- Requirement for professional qualifications for cryptocurrency operators.
- Tax exemption of up to 100,000 CZK on crypto-asset gains per fiscal period or after three years of holding.
New Rules on Cannabis and Psychoactive Substances
From July 1, 2025, it will be legal to sell cannabis products with less than 1% THC, but only in licensed specialty stores. Vendors must comply with new regulations, including:
- Authorization from the Ministry of Health for a special license.
- Administrative and annual maintenance fees.
- Strict marketing and sales requirements.
- Mandatory laboratory testing for quality control.
- Obligation for registration and annual reporting.
- Ban on advertising and sales to minors under 18 years old.
Changes to the Labor Code: Flexibility and New Rules for Employees
Starting April 1, 2025, significant Labor Code changes are expected to come into force, including:
- Minimum wage 2025: Set at 20,800 CZK (124.40 CZK per hour).
- Extended probation period: From 3 to 4 months for regular employees and 6 to 8 months for executives.
- Greater flexibility in working hours, allowing self-management of schedules by agreement with the employer.
- Reduction of the notice period from 2 months to 1 month in specific cases.
- Employment opportunities for minors over 14 years old during summer holidays (maximum 7 hours per day, 35 hours per week).
- Salaries must be paid via bank transfer, and pay slips can be delivered electronically.
- From 2025, employees on parental leave will be allowed to continue performing the same job as stated in their contract, provided they have an agreement with their employer, allowing them to earn additional compensation.
- Fixed-term contracts can be established for a maximum of 3 years, with two possible extensions, for a total maximum duration of 9 years.
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