Daně a legislativa ČR
Inheriting an Investment Portfolio and Taxes
Key takeaways
- Inheritance in the direct line (children, parents) is usually exempt from income tax in the Czech Republic.
- When selling inherited securities, the holding period of the original owner may also be relevant.
- The acquisition cost for calculating the gain on inherited securities is determined from a valuation report or the value at the time of acquisition.
- The rules are complex — consulting a tax adviser or notary is strongly recommended.
Inheritance in the direct line — from parents to children or vice versa — is generally exempt from income tax in the Czech Republic, but tax questions arise not from the inheritance itself but from the later sale of the inherited securities.
The inheritance itself — what happens tax-wise
The Czech Income Tax Act exempts gratuitous income (including inheritance) in the direct line and between persons sharing a household. If you therefore inherit a share portfolio from a parent, no tax liability generally arises at the moment of acquisition. The confirmation of inheritance takes place within the probate proceedings before a notary.
When taxation arises — selling inherited securities
The tax question opens the moment you sell the inherited securities. To calculate the gain you need to know:
- Acquisition cost: either the price at which the deceased acquired the securities, or the value established in a valuation report as of the date of death — verify the exact rule with a tax adviser
- Holding period for the test: whether the period during which the deceased owned the securities counts towards the three-year test — this is a complex question that depends on the specific circumstances
Practical steps for heirs
If you have inherited an investment portfolio, we recommend:
- Establishing the exact acquisition cost for each position (from the deceased's statements or through the broker)
- Retaining documentation from the probate proceedings — valuation reports, court decisions
- Consulting a tax adviser before selling to calculate the tax base correctly
- Considering the timing of the sale with the holding-period test in mind
Donating securities within a family is covered in the follow-up article donating shares and ETFs within the family. The basics of ETF taxation are set out in taxes on ETFs in the Czech Republic.
This article does not constitute tax advice. Rules may change and each situation is individual — consult a tax adviser or notary. See also taxes on ETFs in the Czech Republic.
FAQ
Do I have to pay inheritance tax if I inherit shares?
Inheritance in the direct line (parents, children) is usually exempt from income tax in the Czech Republic. A tax liability may arise only when you later sell the inherited securities — depending on the acquisition cost and holding period.
How is the gain calculated when selling inherited shares?
It depends on establishing the acquisition cost — either the price at which the deceased acquired the securities, or the value determined in a valuation report as of the date of acquisition. The exact rule is complex and we recommend consulting a tax adviser.
Does the time the deceased owned the securities count towards the holding-period test?
This question is legally complex and depends on the specific circumstances. In general, the situation for inherited securities may differ from a standard purchase — always consult a specialist.