On Wednesday, 15 July 2026, the Chamber of Deputies approved, in its third reading, the government's Bill on Electronic Sales Registration and related legislation, commonly referred to as EET 2.0.
The new legislation introduces a modernised electronic sales registration system aimed at creating a fairer business environment, reducing the shadow economy, improving tax collection and, at the same time, significantly lowering the administrative burden on businesses compared to the original EET system.
The Bill will now proceed to the Senate for further consideration. The most significant proposed changes are summarised below.
Changes to income taxes
- "EET OFF" regime for small businesses: The proposal introduces an option for small entrepreneurs to opt out of electronic sales registration, provided they meet the statutory conditions, in particular participation in the first flat-rate tax band and annual income not exceeding CZK 1 million. In exchange, they will be required to pay a higher flat-rate tax.
- One-off tax credit for self-employed individuals: The Bill introduces a tax credit of up to CZK 5,000 for taxpayers earning income from self-employment. The credit will equal the positive difference between 15% of the partial tax base from self-employment and the basic personal tax credit.
- Employee benefits: The current tax exemption limit for non-cash leisure benefits is proposed to be abolished. Holidays and package tours will remain an exception, with tax exemption available only up to CZK 20,000 per year. The existing exemption limit for health-related benefits is expected to remain unchanged. At the same time, the proposal expands the list of employer-provided health care benefits that will be excluded from taxable income. Newly exempt will also be non-cash contributions provided by employers to employees or their family members for selected social services.
- Higher thresholds for filing tax returns: The income threshold triggering the obligation to file an income tax return is proposed to increase from CZK 50,000 to CZK 100,000. For employees, the threshold for other taxable income is to increase from CZK 20,000 to CZK 40,000.
- Promotional and advertising items: The proposal reinstates the possibility of treating promotional and advertising items with a value of up to CZK 500 (excluding VAT) as tax-deductible expenses, including still wine.
- Return of the preschool tax credit and student tax relief: The proposal restores the preschool tax credit (up to the amount of the minimum wage) and the annual student tax credit of CZK 4,020.
- Tax exemption for voluntary tips: Voluntary tips in the hospitality sector are proposed to be exempt from income tax and social security contributions up to 7% of sales.
VAT changes
- Reduced VAT rate for non-alcoholic beverages served in restaurants: Non-alcoholic beverages supplied as part of catering services are proposed to be subject to the reduced 12% VAT rate, aligning them with the VAT treatment of catering services.
- Removal of the VAT deduction cap for certain passenger vehicles: The proposal abolishes the current limitation on VAT deductions for selected passenger cars. From 2027, taxpayers would once again be entitled to claim the full VAT deduction, including for vehicles currently subject to the CZK 420,000 deduction cap.
- Earlier repayment of VAT deducted on unpaid liabilities: Businesses that have claimed VAT deductions on unpaid invoices would be required to repay the deducted VAT after more than three months of non-payment instead of the current six-month period.
- Bad debts: The threshold for adjusting the VAT tax base on small bad debts is proposed to increase from CZK 10,000 to CZK 20,000, while the aggregate limit per debtor would rise from CZK 20,000 to CZK 100,000. The overdue period would be shortened from six months to three months. In addition, VAT base adjustments for bad debts would newly be possible in tax periods other than only the last tax period of the calendar year.
According to the current timetable, EET 2.0 is expected to be launched on 1 January 2027. January is intended to serve as a pilot period, with full operation scheduled to begin on 1 February 2027.
We will keep you informed of further developments.
