Czech Investment Tax Guide

Czech tax law doesn't strictly require FIFO (First In, First Out) for matching buy and sell transactions, but it's the generally recommended approach — and the de facto standard. When you sell shares, they are matched against your oldest purchase first. (Other methods are possible, but they require keeping a precise long-term record of which matches you've already applied.)

• The taxable gain is: sale proceeds minus purchase cost minus deductible fees (Section 10/6 ZDP).
• Losses can offset gains — you only pay tax on the net result within securities.
• One sell order of 100 shares bought in 3 separate purchases creates 3 FIFO pairings, each with its own cost basis.

Hedger performs FIFO matching across your full transaction history automatically. You can review every pairing in the Closed Trades view.

Profits from selling securities held for more than 3 years are exempt from income tax (Section 4/1/w ZDP). This is the 'time test' (časový test).

• The 3-year period runs from acquisition date to sale date, per FIFO pairing.
• The time test applies to stocks and ETFs, but does NOT apply to options or other derivatives — those are always taxable.
• There is also a CZK 100,000 annual exemption for occasional investment income (Section 10/3/a ZDP), but its interpretation is debated — consult your advisor.

Hedger evaluates the time test for every FIFO pairing and automatically excludes exempt gains from the taxable total.

Foreign dividends are typically subject to withholding tax (WHT) in the source country — for example, 15% on US dividends under the US-CZ tax treaty (with W-8BEN filed).

• Separate tax base (§ 16a, Příloha č. 4): gross dividends are taxed at a flat 15%, and the tax withheld abroad is credited against it on row 412. This is what the Hedger tax report fills in.
• General tax base (§ 8, Příloha č. 3): dividends are added to your other income (15% / 23%) with the same credit under § 38f. The report mentions it as an alternative but does not calculate it.

Either way, the credit is limited by the double-tax treaty with each country: tax withheld above the treaty rate cannot be credited in the Czech Republic — only the country that withheld it can refund it. The rate is 15% for the US, Germany or Switzerland, 10% for France, the Netherlands or Austria and 5% for Poland, while Austria withholds 27.5%, Germany 26.375% and Switzerland 35%. Hedger applies each country's treaty rate and shows the calculation in the tax report.

All foreign currency amounts must be converted to CZK for the tax return. The Czech National Bank (CNB) publishes two types of rates:

• Daily rate (denni kurz): The CNB exchange rate on the specific transaction date. More precise, but can be higher or lower depending on when each trade happened.
• Yearly rate (jednotny kurz): The average CNB rate for the entire year, published in January of the following year. Simpler and more stable.

You can choose either method — most tax advisors recommend picking whichever results in lower tax. You must use the same method consistently for all transactions in a given year.

Hedger calculates both automatically and highlights which method is more favorable for you.

• Option premiums received are taxable income — reported as 'F — JINE OSTATNI PRIJMY' in Attachment 2.
• The 3-year time test does NOT apply to options or derivatives — they are always taxable regardless of holding period.
• On assignment, the option premium can be included in the share's cost basis (Section 10/6 ZDP), reducing the future taxable gain on the stock.
• Hedger tracks option premium attribution automatically and shows it in the Tax Report.

When you convert between currencies (e.g. sell USD to buy EUR inside your broker), there is an implicit §10 gain or loss in CZK terms vs the CNB rate at the moment of conversion. Hedger ships an optional module that tracks these explicit conversions, FIFO-pairs currency lots across all your brokers, and surfaces the §10 F gain or loss for your tax return. The module is opt-in and OFF by default.

Concrete example: deposit 100,000 CZK, convert it to 4,500 USD at the CNB rate of 22 CZK/USD. Months later you convert 4,500 USD back to CZK at rate 20 CZK/USD — you realize a loss of 4,500 × (20 − 22) = −9,000 CZK, reportable under §10 F.

How Hedger handles it:

• Only explicit conversion ledger entries generate §10 F events. Stock trades, dividends, deposits and withdrawals never create FX realizations on their own — their CZK conversion is already baked into §10 D stock P&L per leg at daily CNB rates.
• FIFO pairing is cross-broker — currency is fungible across your accounts for §10 purposes.
• The 3-year movable-property time test (§10(1)(b)) applies; pairings whose matched acquisition is older than 3 years are flagged exempt.
• Each event is priced using the CNB rate matching your daily-vs-yearly selection on the tax report.
• The tax report shows a nudge with the potential delta even when the module is off, so you can see whether turning it on would help or hurt before committing.

Caveats to discuss with an advisor:

• Through 2023 private-individual FX gains were fully exempt via §4(1)(za) ZDP. That carve-out was repealed effective 2024-01-01; the post-2024 interpretation is still forming.
• The §10(1)(q) threshold of 50,000 CZK per year for occasional currency transactions may apply if your total FX activity is small — the module does not auto-detect this threshold and you should evaluate it manually.
• Most Czech tax tools (including Taxomat) default to ignoring private-individual FX entirely. Hedger's module is an alternative reading that can save or cost you tax depending on your currency trades; advisor review before filing is strongly recommended.

Hedger handles:

• FIFO lot matching across all supported brokers
• Time test evaluation for every pairing
• Option premium attribution to assigned shares
• CNB FX conversion (both daily and yearly rates)
• Dividend and withholding tax aggregation
• Stock split and corporate action cost basis adjustments
• EPO XML export for mojedane.cz
• Detailed CSV exports for your records

You (or your accountant) still need to handle:

• Other income (employment, business, rental, etc.)
• Deciding between the separate base and credit method for dividends
• The CZK 100,000 occasional income exemption (ambiguous interpretation)
• Social and health insurance implications
• Crypto and other assets not imported through Hedger
• Final review and submission of the tax return