Zero taxation on company sales is an incentive for start-ups
Capital gains tax on the sale of company shares will be abolished in Czechia from 2026. The amendment gives entrepreneurs greater freedom and motivation to build companies with a long-term perspective. The change, which appears to be a minor short-term loss in the state budget, may have a significant impact on the Czech start-up scene and innovation. The aim is to keep successful companies founded in Czechia at home – and with them their founders, know-how, and capital.
The change and its impacts
From January 1, 2026, sales of shares in companies (capital gains tax) will not be subject to taxation. The amendment passed smoothly through the legislative process. The Czech tax system is thus returning to a regime of income exemption upon fulfillment of a time test of 3 years for shares and 5 years for limited liability companies. The CZK 40 million limit remains in place only for the taxation of income from the sale of crypto assets.
The original estimated capital gains tax revenue was in the hundreds of millions of CZK and in later years in the low billions of CZK. However, this is negligible compared to, for example, the estimated VAT collection for 2026 of CZK 415.4 billion, corporate income tax of CZK 221.5 billion, or personal income tax of CZK 192.6 billion. Excise duties could bring in CZK 165.7 billion next year.
Positive news for start-ups and society
The abolition of the capital gains tax will strengthen the desire to do business and stay in Czechia. Young entrepreneurs, university graduates, and more experienced managers who set up their own companies here will have clearer and more predictable conditions. The local start-up scene is becoming increasingly successful. I was delighted to watch the presentations of many of them at Innovation Week in early October 2025. The Czech economy simply needs to reduce its dependence on the automotive and heavy industries.
"Tax simplicity encourages entrepreneurial courage."
An example from current practice
A start-up is founded in 2025 with a registered capital of CZK 10,000. They play their cards right, they are doing well, they are growing, and after five years of successful business in the US and the EU, the founder sells the company in 2030 for CZK 1 billion. That's a great success, don't you think? Congratulations!
But then the moment of truth would come. With a tax base of almost CZK 1 billion, an exemption of CZK 40 million, and a 23% tax rate, they would pay around CZK 220 million in tax. Do you think they would actually pay that money? What is more likely? The founder would either change the company into a holding company or a foundation, or he would transfer it completely to another tax jurisdiction and would not pay any capital tax in the Czech Republic at all.
Doing business in Czechia? Why?
We must not forget that the more successful a business is, the more room there is to choose a tax domicile. And I am not talking about any gray areas or even illegal activities aimed at circumventing tax obligations. Not at all! In the digital world, a Czech company may have predominant sales in other countries, and this situation already provides opportunities to change its tax domicile. The question arises: why keep tax registration in the Czech Republic when sales to Czech customers account for only 1% of revenue, for example?
The abolition of the capital gains tax is not just a legislative amendment - it is a strategic decision. In the long term, it will strengthen investment, create jobs, and contribute to greater diversification of the Czech economy.
Change will bring much more
I definitely welcome the abolition of capital tax. I welcome any simplification of the Czech tax system. Zero capital taxes and employee incentive programs known as ESOPs are a significant positive impulse. The longer we maintain a functional start-up scene in our country, the better Czech companies will fare. After all, start-ups pay corporate income tax and VAT, and their employees pay personal income tax. This has a much more favorable impact on the state than collecting a one-off capital gains tax.