The amendments propose abolishing withholding tax, removing the CZK 40 million capital gains cap, and increasing R&D allowances.
The Czech Republic’s Chamber of Deputies is reviewing a draft legislation on the”Act on Single Monthly Employer Reporting (jednotné měsíční hlášení zaměstnavatele or JMHZ)”, which proposes amendments to the Income Tax Act.
The draft proposes moving the JMHZ start date to 1 April 2026 instead of early 2026.
Other proposals include:
Increase in R&D allowance
A proposed change aims to make research and development (R&D) allowances appealing by introducing a 150% deduction for the first CZK 50 million in expenses. This increased deduction applies to a group allowance to prevent splitting costs between group companies. Costs above this amount can still be claimed at 100% without restrictions. The proposal extends the claim period from three to five years, offering more flexibility in when to claim.
Abolition of withholding tax
The draft bill outlines some proposals addressing the planned abolition of withholding tax on 1 January 2027. One proposal suggests that small earnings from work agreements or small-scale jobs should require monthly personal income tax prepayments. Filing a tax return would stay voluntary, with taxpayers able to file if they want to claim deductions, tax credits, or relief.
Abolition of CZK 40 million cap on capital gains from securities, shares, and cryptocurrency
The proposal aims to abolish the CZK 40 million annual limit on tax-exempt income from the disposals of securities, business shares, and cryptocurrencies meeting the time-test, effective 1 January 2026. The limit was introduced for securities and shares on 1 January 2025 and for crypto assets on 15 February 2025.
Earlier, the Czech Republic passed a legislation on 14 February 2025, exempting certain cryptocurrency transactions from individual income tax.
Increased threshold for full adjustment of receivables
The proposed change increases the limit for 100% tax-deductible adjustments on receivables from TCZK 30 to TCZK 50, including adjustments applied by banks.
