You may be wondering…

• Do all gifts trigger income tax?

• What are the exemptions?

• Does the exemption apply only to parents and children, or also to siblings?

• What if I receive a gift from a partner I live with, but we’re not married?

Clients ask me…

Do gifts have to be taxed?
Yes, but only in certain cases. Since 2014 there has been no separate gift tax – gifts are assessed as part of income tax.

When is a gift exempt from tax?

• Gifts from close relatives in the direct line (parents, children, grandparents, grandchildren).

• Gifts from close relatives in the collateral line – especially siblings, uncles, aunts, nieces, and nephews.

• Gifts from a person with whom the donee has lived in the same household for at least 1 year and provided or received care.

And when is tax payable?
If the gift comes from another person (“non-relative”), and the total value of such gifts from that person exceeds CZK 15,000 in one year.

Income tax on gifts in a nutshell

• Exempt gifts – direct line (parents–children), collateral line (siblings, uncles, aunts, nieces, nephews), spouses, and household members.

• Threshold – gifts from other persons above CZK 15,000 per year are taxable.

• Tax rate – 15% (23% for high-income taxpayers).

• Obligation – the donee must declare the taxable gift in their income tax return.

Main risks and mistakes

1. Assuming that the gift tax was abolished and therefore there’s nothing to deal with. In fact, gifts are covered by income tax.

2. Failing to declare gifts from “non-relatives.” The tax office can assess back taxes and penalties years later.

3. Not knowing the scope of the exemption. Many believe it only covers parents and children, but it also covers siblings, uncles, aunts, nieces, and nephews.

4. Underestimating the value of the gift. For real estate, the decisive factor is the market value, not a family’s “informal estimate.”

Step-by-step process

1. Identify the donor. If it’s a relative in the exempt group or a household member, no tax applies.

2. Calculate the annual value of gifts from non-relatives. If the total exceeds CZK 15,000, tax must be paid.

3. Include the gift in your tax return if it’s taxable.

4. For larger gifts (real estate, high-value assets), consult a lawyer or tax advisor.

Real-life example

A client received a car worth CZK 300,000 from his uncle. Because the uncle is a relative in the collateral line, the gift was exempt from income tax. But if the same car had been given by a family friend, the client would have had to declare it and pay 15% income tax.

Why to be careful

The tax office has access to the land register, vehicle registry, and other records, and can easily detect gifts. Defenses like “I didn’t know I had to declare it” rarely succeed.

Lawyer’s recommendation

• Always check if the donor falls into an exempt category.

• For larger gifts, always consider tax implications in advance.

• Don’t try to hide a gift – penalties and back taxes are far more painful than timely compliance.

Checklist:
☑ I know whether the donor is in the direct line, collateral line, or same household
☑ I calculated the value of gifts from non-relatives
☑ If above CZK 15,000, I’ll include it in my tax return
☑ For large gifts, I’ll consult a professional

FAQ

Do I have to pay tax on a gift from my sibling?
No – siblings are in the collateral line, which is exempt.

How is the value of a gift determined?
For movables, the market value applies; for real estate, the official fair market value used for tax purposes.

What about a gift from my partner if we’re not married?
If you can prove that you’ve lived together in the same household for at least one year, the gift is exempt.