Abolition of the CZK 40 Million Limit on the Sale of Shares and Equity Interests: What It Means

Summary of the Change

From 1 January 2026, the CZK 40 million cap on tax-exempt income from the sale of equity interests and shares by individuals will be abolished, provided the so-called time test is met. This means that if you own an equity interest in an LLC (for over 5 years) or shares (for over 3 years), your income from their sale will be fully exempt from income tax, regardless of the amount.

Important: for crypto assets (e.g., Bitcoin, Ethereum), the CZK 40 million limit will continue to apply.

Context and Legislative Development

Status Before 2025

Until 31 December 2024, relatively simple rules applied: if a natural person held shares for a minimum of 3 years, or equity interests in a corporation for a minimum of 5 years, the income from their sale was fully exempt from tax, regardless of the amount.

2025 -- Introduction of the Limit

From 1 January 2025, a clause was added to the law (Income Tax Act) stipulating that even if the time test is met, income exceeding CZK 40 million per year must be taxed proportionally. That is, up to CZK 40 million may be exempt; above this amount, taxation is required.

This limit applied to income from the sale of shares, income from the sale of equity interests in companies, as well as (in broader application) income from crypto assets. However, the limit brought a number of practical difficulties -- proportional taxation calculations, administration, and complications for transactions exceeding CZK 40 million. In theory, it could be circumvented (e.g., by spreading transactions across multiple years).

Current Situation -- Abolition of the Limit

In September 2025, the Chamber of Deputies approved the Senate version of the amendment that abolishes the CZK 40 million cap for equity interests and shares. The amendment has already been publicly announced by the Ministry of Finance.

The Ministry's press release states that the motivation is to eliminate technical complications and support the development of the capital market. However -- the limit remains for crypto assets.

Impact on Investors and Business Owners

Advantages of the Change

• For profitable transactions exceeding CZK 40 million, no tax liability will arise if the time test is met.
• The administrative burden and complexity of proportional taxation calculations will be reduced.
• For owners of family businesses, startup founders, and investors with larger portfolios -- greater motivation to plan sales without a tax threshold.
• Simplicity and predictability are restored -- similar to the pre-2025 rules.

Note -- What Remains:

• For income from crypto assets, the CZK 40 million limit will continue to apply. This means that even if you hold cryptocurrency for a very long time, a portion of its sale proceeds will likely need to be taxed.
• Transactions completed in 2025 above the stated limit are still governed by the old rules. Therefore, if you sell equity interests or shares before 31 December 2025 and the income exceeds CZK 40 million, the tax restriction applies to you.
• The time test must be met -- a sale cannot be exempted before the required holding period (3 years for shares, 5 years for equity interests).

The abolition of the CZK 40 million limit on the sale of shares and equity interests is a major change that brings Czech legislation closer to the simpler pre-2025 rules. For investors and business owners, this means greater freedom and reduced tax risk when selling significant holdings.

However, timing is important -- if you intend to sell equity interests or shares in 2025 and the expected price exceeds CZK 40 million, you may consider postponing the transaction to 2026, if possible. But it is always necessary to verify that the time test will be met.