Czech Republic: Legislation including changes to R&D allowances, other income tax changes passed by Parliament

Changes to R&D allowances effective January 1, 2026

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September 11, 2025

The lower house of Parliament (Chamber of Deputies) on September 10, 2025, passed the new law associated with the Single Monthly Employer as amended by the Senate, which includes the following income tax changes:

  • Changes to research and development (R&D) allowances effective January 1, 2026 (read TaxNewsFlash)
  • Repeal of the annual limit of CZK 40 million for the exemption of income from the sale of securities and shares in commercial corporations (not including income from the sale of cryptoassets)
  • Introduction of a new system of taxing income from exercising qualified employee options granted by qualified employers to qualified employees
  • Repeal of withholding tax for agreements on work outside employment (or small-scale employment) and remuneration of statutory body members who are Czech tax nonresidents
  • Clarification of the definition of leisure-related employee benefits
  • Addition of the definition of a low-emission vehicle for Income Tax Act purposes

The legislation will now go to the president for signature.

Read a September 2025 report prepared by the KPMG member firm in the Czech Republic

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