Plánované změny v technickém zhodnocení dlouhodobého majetku

Planned changes in the technical improvement of fixed assets

We have already informed you about the planned changes in tax depreciation of fixed assets HERE. As a reminder, these changes are in connection with the amendment to the Accounting Act and the related implementing amendment to the Income Tax Act. The effectiveness of these amendments is still uncertain, but based on the information available, probably not earlier than 1 January 2026.

Today we will focus on "technical improvement", which should be replaced by the term "additional improvement". Additional improvement should occur when the subsequent costs of appreciating the asset exceeds (in aggregate over the tax year) one of the following thresholds:

• an absolute amount of CZK 100 000; or
• a relative amount of 10% of the tax value of the asset, if this amount is higher than the absolute amount, but not higher than CZK 10 000 000 (amounts above CZK 10 000 000 should always constitute additional improvement).

Thus, in the case of more valuable assets (e.g., with a tax value of CZK 5,000,000), the taxpayer will generally be able to choose to treat the higher of the above amounts, i.e., CZK 500,000, as the limit for additional improvement (expenditures up to this limit will constitute one-off costs).

The above expenses up to CZK 100,000 may also be considered as additional improvement if the taxpayer so chooses.

The additional improvement should increase the tax value of tangible assets. However, such an increase in the value of tangible assets generally does not adjust the amount of tax depreciation but extends the depreciation period accordingly. However, if the depreciation period so extended is longer than the minimum depreciation period, the tax depreciation may be recalculated (and the depreciation period reduced proportionately).

The tax treatment of intangible assets should generally be based on accounting.

A completely new feature should be the taxpayer's option to treat repair and maintenance costs as additional improvement if the taxpayer so chooses. This may in practice represent a significant and very welcome simplification in situations where the taxpayer is not sure whether the costs should be considered as a repair and maintenance in nature or rather additional improvement. Finally, we will probably see the possibility of a tax 'safe' option in these situations.

With regard to the above-mentioned amendment, the possibility to request the tax administrator for a binding assessment whether a specific intervention in the property is a technical (newly additional) improvement or repair should be abolished, as the importance of this provision will significantly decrease (even now it is a provision that taxpayers use rarely).

Taxpayers using international financial reporting standards should not be subject to the above rules - the tax treatment should generally correspond to the accounting treatment.

If you would like more detailed information, please contact the authors of this article or other members of the EY team with whom you work.

Authors:

Vladislav Pejchal

Marek Sloup

Patrik Zítka