Income tax on rental income (daň z příjmů z pronájmu, § 9)
Rental income in Czechia is taxed under § 9 of the Income Tax Act; you deduct either actual expenses or a flat 30 % (max CZK 600,000). Actual expenses include mortgage interest, depreciation, repairs, insurance and the annual property tax. Tax of 15 % is paid on the base (23 % above the statutory threshold); social security and health insurance contributions are not paid on § 9 income.
Example
Rent of CZK 18,000 a month gives CZK 216,000 a year. With the 30 % lump sum, the base is CZK 151,200 and the tax CZK 22,680. If the landlord bought the flat with a CZK 3,150,000 mortgage at 5.00 %, he paid about CZK 156,000 in interest in the first year; with actual expenses (interest, repair fund, insurance, property tax, depreciation) his tax base comes out at zero. How the flat is depreciated, and when the lump sum is the better choice, is shown in our article on tax on rental income.
In practice
Rental income goes in your tax return (daňové přiznání); the employer's annual reconciliation does not cover it. An employee with no other side income need not file just for rent of up to CZK 20,000 a year (§ 38g). For actual expenses, keep records and receipts. With the flat rate, interest can no longer be deducted on top. Nor can interest on a let flat be claimed as a non-taxable part of the base under § 15, which applies only to owner-occupied housing.
How it differs
For owner-occupied housing, the interest deduction under § 15 reduces the tax base; for a rental, interest is an expense under § 9. Short-term rental with services is usually a trade (živnost) under § 7, with mandatory insurance contributions.
Frequently asked questions
How is rental income taxed in Czechia?
Under § 9 of the Income Tax Act, at 15 % of the rent minus expenses (23 % on income above the higher-rate threshold). You deduct either your actual expenses or a flat 30 % of the rent, at most CZK 600,000.
Flat-rate 30 % or actual expenses: which is better?
With a mortgage, actual expenses often win, because interest, depreciation and repairs can together exceed 30 % of the rent. The flat rate is simpler and covers everything, interest included, and the choice cannot be changed afterwards for that year.
Do I pay tax on a small rental income?
An employee with no other side income need not file a return for rent of up to CZK 20,000 a year. Above that the rent goes in your return, and a return is required whenever your taxable income exceeds CZK 50,000 a year.
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