Change to the tax depreciation of assets

Change to the limit for classification as a tangible asset for the purpose of the Income Tax Act

The Income Tax Act defines a tangible asset as an asset with an input price of CZK 80,000 (the limit for classification as a tangible asset for the purpose of the Income Tax Act was CZK 40,000 before 1 January 2021). This new limit applies also to the technical appreciation of assets. According to the transitional provisions of the Income Tax Act, the limit applies to all tangible assets acquired from 1 January 2021, regardless of which tax period is used by the tax subject.

The transitional provisions also enable tax subjects to use the increased limit for tangible assets and their technical appreciation acquired from 1 January 2020.

Elimination of the tax depreciation of intangible assets

From 1 January 2021, there will be only accounting depreciation of intangible assets, and the accounting depreciation will be considered a tax deductible expense. This can be applied to intangible assets acquired after 1 January 2020.

Introducing the extraordinary depreciation of tangible assets classified in the first and second depreciation groups and acquired between 1 January 2020 and 31 December 2021

Assets classified in the first depreciation group will be depreciated continuously and evenly for twelve months up to 100 per cent of the input price. The assets classified in the second depreciation group will be depreciated for twenty four months, where up to 60 per cent of the input price will be evenly depreciated during the first twelve months and 40 per cent of the input price will be evenly depreciated during the following twelve months. The depreciation can be made only by the first owner of the asset.