Czech Republic: Summaries of recent Supreme Administrative Court decisions

The KPMG member firm in the Czech Republic prepared reports on recent tax-related Supreme Administrative Court (SAC) decisions:

• The SAC held (4 Afs 121/2024-31) that under the value added tax (VAT) law effective until June 30, 2025, in determining whether land that is sold may be treated as “building land”—and thus a taxable supply with the right to deduct related input VAT—classification in a zoning plan alone is not sufficient. Rather, it must be determined that the intention of the contracting parties is to actually build on the land, which may be confirmed under the sale agreement. However, under the VAT law in effective from July 1, 2025, it is now sufficient for the land to be specified in the zoning documentation as designated for building a structure permanently attached to the ground. Read an October 2025 report
• The SAC held (22 Afs 143/2025 - 40) that that income from the sale of shares in a Czech company, when more than 50% of its value is derived from Czech real estate, is taxable in the Czech Republic under both domestic law and under the Czech-Cyprus income tax treaty. The court rejected the taxpayer's argument of legitimate expectations, finding no consistent or long-term administrative practice that would prevent such taxation. Read an October 2025 report