In a judgment on June 28, 2017 (File no. 4 Afs 88/2017), the Czech Supreme Administrative Court diverged from the interpretation given in the explanatory notes for Senate Regulation no. 340/2013 Coll., on Real Estate Transfer Tax (the "Regulation"). Instead, the Court found that the tax base for real estate transfer tax (under Art. 11 (1) (a) of the Regulation) does not include value-added tax due from transferors who are VAT payers.
The tax base for real estate tax is the agreed purchase price for the transferred real estate excluding VAT. This means that VAT-paying transferors, who previously paid a higher rate of real estate tax, will no longer be at a disadvantage.