Tax and Legal News – January 2026

Planned accounting recodification

Imagine a world in which the law allows or even requires you to use uniform standards and focus on what matters: what the financial statements say about the health and overall picture of a company. This is the vision presented by the new Accounting Act.

While the current accounting legislation from 1991 has long served its purpose, nowadays it often acts as an obstacle—the rules are detailed, but outdated and sometimes at odds with the economic reality in which the business sector operates. The recodification promises change and also affects related ecosystem legislation: taxes, auditing, valuation and reporting to regulators.

The new law will bring about quite a lot of changes. What you will notice is a shift in language: there is no longer so much talk about "accounting" (i.e. the process), but rather about "financial statements and reporting" (i.e. the outputs). The essence of the proposal is to emphasize the finish line rather than the starting line. Accounting should not be an end in itself, but should serve to give users an accurate picture of the company. In practice, this means the law will define general principles and specific rules for valuation, and accounting will be somewhat more flexible where this leads to better information. For the CFO, this will be both a challenge and a relief: they will have greater responsibility for the methods chosen and will have to rely more on the professional judgment of the accountant, but they will face fewer exceptions and will no longer need to show personal courage when, in the current setup, they decide to follow international reporting standards. Whether this will be a relief for the tax office, which likes to rely on clear rules, is difficult to predict.

The key issue is the expansion of the option to report according to IFRS. A larger group of entities will be able (or required) to prepare financial statements according to IFRS. The law itself builds on a number of IFRS principles, and their philosophy will also permeate Czech rules. What we see at home will resemble what we see around the world. And even those who do not ultimately prepare IFRS financial statements will feel the influence of international standards in the form of more comprehensible terminology and the implementation of modern reporting principles.

The removal of administrative requirements that have been superseded by technological advances is also worth mentioning. Today, the law details what accounting books you must keep – a journal, a ledger, analytical books and off-balance sheet books. New? You will be required to keep accounting records in such a way that they provide the data needed for reports and have the necessary features to maintain an audit trail allowing you to trace who performed a particular operation, when, and how.

In valuation methods, we can expect an upgrade to present value valuation for long-term receivables and debts. Excel with the NPV function will thus become a standard tool even for ordinary accountants. And we could go on listing new features for quite some time.

Accounting is and will continue to be linked to taxation. That is why the new Accounting Act is accompanied by an amendment that will update the related regulations. This comprehensive patch to the system will ensure that the new version of accounting runs smoothly within the entire legal environment.

The amendment also introduces changes that are not directly related to accounting. A new uniform term, "tax value," is being introduced for assets and liabilities. Instead of different purchase prices, residual values, and tax values, the aim is to standardize everything. There will be a major change in depreciation: the existing depreciation groups will be abolished, depreciation will be calculated monthly instead of annually, tax depreciation will be accelerated for some assets and slowed down for others. The limit for one-time write-offs of low-value assets will also increase again, to CZK 100,000. Overall, the rules for assets appear to be simplified, and, most importantly, it will be possible to file tax returns based on financial results according to IFRS (with certain adjustments). For companies affiliated with a group that uses international standards other than IFRS, the rules will at least be approximated.

We should not expect a revolution in VAT and other tax laws, but rather adjustments to terminology where the law refers to accounting terms. The planned mandatory electronic invoicing from the EU will have a greater impact on VAT. The recodification of accounting will enable fully digitized accounting in which mandatory e-invoices will be easier to implement. Still unsure whether you can shred paper invoices after scanning them? New legislation will give digitization the green light, explicitly allowing exclusively electronic accounting. This will also affect other laws. For example, the Archiving Act will have to be harmonized so that digital accounting records are fully-fledged archival documents. Of course, this also imposes obligations in the opposite direction: once you have only electronic data, you must ensure its protection and readability for a period of X years. Technologies such as blockchain timestamps or robust backups will therefore become more important. However, this is an IT operation, and the important thing is that legislation will no longer hinder digitization.

There are many connections between different areas, and simplification is often talked about, but this is a conceptual change and in practice it will probably be a storm of reform in which the challenge will be to navigate smoothly and without losing anything. Companies will undoubtedly face an audit of existing accounting rules, software upgrades, IT readiness reviews, tax impact assessments, training and changes in team competencies. This is a multidisciplinary project that requires a considerable amount of time, but one that should not be postponed.

An optimistic timeline for the legislative process assumes the law will be passed by Parliament in 2026. Given the magnitude of the project, the legislative recess is expected to last throughout 2027, and from 1 January 2028, the new rules are to apply to the 2028 accounting period. In the case of tax laws, it is likely that some things (such as depreciation) will start immediately in 2028, but some may be postponed until 2030.

Change is coming, and it is significant. But we have a unique opportunity to be well-prepared for it and use it as a catalyst for improvement. The accounting revolution can be transformed into a positive evolution of our accounting and tax ecosystem. We have an advantage: we know where we are headed, because IFRS and international best practices are not terra incognita.

The proposal arrived at the Chamber of Deputies in December last year, just before the change at the Ministry of Finance, and the implementation details are yet to be finalized. We do not know how much time the new executive agenda will take and whether the finalization of decrees and authorizations for new laws will remain a priority. This may lead to "caution" – a tendency to wait until everything is signed and issued, if at all.

Recodification is essentially politically neutral and technocratic. There seems to be relatively broad consensus on the direction towards modern, comparable and digital accounting with reasonable links to taxation. This provides a good basis for smoother negotiations. Fine-tuning the amendment, particularly the link to income tax law, may take longer. If it makes sense to fine-tune the tax connection, why not? But trying to fine-tune everything to 100% seems rather counterproductive.

Partial amendments to the Accounting Act and support for practice through interpretations issued by the National Accounting Board, which will be supplemented by a whole series of others in 2026, have helped us survive the past decade and will help us bridge the period until the recodification comes into effect. Let’s hope that it will not be another decade.

We have a unique opportunity for global reevaluation and ground-up improvement. So, our New Year's resolution is simple: let's start preparing now and not be afraid of change.