VAT on New Properties in the Czech Republic: When It Applies and How Much It Costs

When a property sale is subject to VAT

In the Czech Republic, VAT on new property mainly applies to sales made by a VAT-registered supplier, such as a construction company or developer. Since 1 July 2025, a sale is taxable when it is the first supply of the property and takes place by the end of the twenty-third calendar month following the month of completion. A property is considered completed when the first occupancy approval becomes legally effective or, where no approval is required, when it can be used permanently.

When the 12% rate applies

The reduced 12% VAT rate applies to property classified as social housing. This generally includes residential units with a floor area not exceeding 120 square metres and single-family houses of up to 350 square metres. In apartment buildings, more than half of the total floor area must consist of residential units meeting the relevant statutory requirements.

When the 21% rate applies

The standard 21% VAT rate applies when the property does not qualify for the reduced rate. This may include apartments exceeding 120 square metres, single-family houses exceeding 350 square metres and commercial premises. A garage or parking space sold as a separate unit may also be subject to the standard rate. The correct treatment depends on the property’s technical and legal classification and on the structure of the transaction.

How VAT affects the final price

For a net price of CZK 10 million, VAT at 12% amounts to CZK 1.2 million, bringing the total to CZK 11.2 million. At 21%, VAT is CZK 2.1 million and the total reaches CZK 12.1 million. Sales falling outside the first taxable supply within the statutory period are generally exempt, although taxation may be chosen in certain cases. A substantial alteration can restart the period if it changes the property’s use or living conditions and its costs exceed 30% of the taxable amount of the subsequent sale.

Link:

Czech Financial Administration – VAT treatment of immovable property from 1 July 2025:
https://financnisprava.gov.cz/cs/dane/dane/dan-z-pridane-hodnoty/informace-stanoviska-a-sdeleni/dph-u-stavebnich-cinnosti-pri-prevodu/informace-k-uplatnovani-dph-u-nemovit-veci-od-01072025

Czech VAT Act No. 235/2004:
https://www.zakonyprolidi.cz/cs/2004-235

Detailed guidance issued by the Czech Financial Administration:
https://financnisprava.gov.cz/assets/cs/prilohy/d-seznam-dani/120126__Informace_k_uplatnovani_DPH_u_nemovitych_veci_od_010.pdf