Tax and Legal News – February 2026

How are we doing?

This is an optimistic editorial. The Czech government has announced it will not raise taxes. In addition, corporate income tax is to be reduced. Pessimists might argue this is not sustainable given the state budget deficit. But let's stay optimistic. We will have a stable tax system for the next four years. Is the system good or bad?

Quite good in international comparison. According to the international competitiveness index published by the Tax Foundation, the Czech Republic ranks 10^th out of 38 countries.

France and Italy occupy the bottom ranks. Poland, which has recently become attractive to foreign investors, is almost at the bottom in 35^th place. Hungary is one spot ahead of us. Of the jurisdictions we often deal with for our clients, Switzerland and Luxembourg are in fifth and sixth place. Cyprus, Malta and the countries of the Arabian Peninsula are not included in the comparison.

Our performance is balanced. We have a below-average (read: competitive) corporate tax rate. And the government has not even lowered it to the promised 19%. We have low property taxes – a combination of real estate tax and no real estate transfer tax. According to comparisons, we also have relatively low personal income tax. The only aspect in which the Czech Republic has above-average taxation is indirect taxes.

Such comparisons are not perfect. If you read the index carefully, you will find inaccuracies. However, they can indicate where the government would look if it needed to increase state budget revenues. It probably won't be the corporate tax rate, which it wants to reduce. We tax consumption heavily in international comparison, so that's unlikely too.

That leaves taxation of individuals and property. Coincidentally, these are areas in which a number of concepts that seem radical from a Czech perspective have recently been emerging around the world. 

Property taxes are often levied on the market value of real estate.

In terms of personal income tax, there are proposals targeting high-income individuals. California, for example, wants to introduce a one-off 5% tax on the current value of assets for the super-rich. No income, no profit. 5% of the value of assets. The expected yield is approximately USD 100 billion from more than 200 billionaires. Another country proposing taxation of the wealthy is the Netherlands. Again, in a slightly different way. By taxing unrealized gains. That is, you hold a share, its value changes, and you pay tax on the difference. Without even selling the share.

So let's stay optimistic and believe taxes will not increase.