2025 Czech legal landscape: key trends and must-know insights
.As we step into 2025, this newsletter highlights the transformative trends and developments shaping the Czech legal landscape in the new year.
This year will bring pivotal changes. The EU AI Act introduces critical obligations and bans to ensure responsible AI use. The latest amendment to the Capital Market Undertakings Act aims to improve gender balance in corporate management. There are new model provisions for Green Loans, Czech criminal law will be modernized, and much more.
Join us as we delve into the evolving legal landscape and its impact on key sectors.
Corporate and commercial
Limitation of tax exemption for income from the sale of securities and ownership interests
As of 1 January 2025, the long-anticipated limitation of the exemption for income from the sale of securities or ownership interests in business corporations will be introduced.
After meeting the time test of three years (for securities) or five years (for ownership interests), an aggregate limit of CZK40 million (EUR1,6 million) per calendar year will be introduced for the income tax exemption.
Income received in a given year in excess of the limit will be subject to taxation at the basic tax rate (15%) or at the higher tax rate (23%), with the higher rate now calculated not on annual income of 48 times but on 36 times the average monthly wage. For tax purposes, it will be possible to apply the tax acquisition price of the securities or ownership interests at the amount determined by an expert's report as at 31 December 2024 (the report itself can ideally be prepared in the first half of 2025).
The new regulation similarly affects the taxation of foreign dividends, which are normally taxed at 15% and will be subject to a tax rate of 23% when crossing the new threshold.
Pending amendment to the Capital Market Undertakings Act to provide for gender balance in the management bodies of certain issuers (proposed for third reading)
The regulation proposed for consideration at the third reading in the Chamber of Deputies (as of 17 December 2024) would apply to listed companies, which should ensure gender balance in their board of directors.
At least 40% of non-executive directorships or 33% of directorships should be filled by women. When selecting between equally qualified candidates, a company that hasn't achieved one of the objectives should be obliged to give preference to a candidate of the under-represented gender (a woman), and a derogation from this obligation should only be possible in justified cases.
The amendment to the Act is a transposition of the European Directive on improving the gender balance among directors of listed companies and related measures, which has a transposition deadline of 28 December 2024.
Real estate and construction
Construction requirements under the new Building Act
The new Building Act, Act No. 283/2021 Coll. (Building Act), has changed the requirements for construction in the Czech Republic.
Sections 137 to 152 of the Building Act contain the substantive requirements for construction. The provisions implement requirements for demarcating land and placing buildings from the previous Decree No. 501/2006 Coll., on General Requirements for the Use of Territory and technical requirements from Decree No. 268/2009 and from Decree No. 398/2009, on General Technical Requirements to Ensure Barrier-Free Use of Buildings, which have been abolished.
To implement the Building Act, the government adopted a new national decree No. 146/2024 Coll., on Requirements for Construction (National Decree). The City of Prague also issued Decree No. 12/2024 Coll. for its territory (Prague Building Regulations). And the City of Brno has also established building requirements for its territory by Decree No. 14/2024 (Brno Building Regulations). The City of Ostrava also has the right to regulate construction in its territory but hasn't yet issued a regulation. The Prague and Brno building regulations differ in many respects, with both cities setting different requirements for demarcating land plots and siting buildings, and some technical requirements.
Compared to the previous legislation, there's been a fundamental change in the scope of the regulations. According to the previous legislation, the national decree applied everywhere except in Prague, where the Prague Building Regulations applied exclusively to buildings. But this exclusivity was lost. According to Section 152 of the Building Act, the National Decree will also now apply in the territory of Prague and Brno, in cases not regulated by their building regulations. Obviously, this could cause confusion as to which requirements should apply in these cities, ie whether the general or the special construction requirement will apply in a particular case. A guide for Prague summarising all the requirements applicable from both pieces of legislation would make it easier for project planners and builders to apply the correct regulations.
Digitising construction proceedings
On 11 December 2024, the Senate debated an amendment to the Building Act under the Chamber of Deputies' Print No. 832. It will provide for a transitional period for using building administration information systems until 31 December 2027.
The amendment, known as the partial bypass of the digitisation of construction proceedings, proposes the abolition of the obligation to use the Builder's Portal (Portál stavebníka) and the Electronic Documentation Register (Evidence elektronických dokumentací) for administrative authorities. But this bypass wouldn't apply to builders.
The pressure to partially maintain the Builder's Portal is to some extent due to conditional subsidies. The Senate should also discuss the possibility of a broader bypass, ie a complete shutdown of these systems for a transitional period. Given their current dysfunctionality, this would be a preferable solution for the viability of construction proceedings.
“These updates reflect the dynamic environment businesses and organisations will navigate in 2025, presenting both challenges and opportunities.”
Finance
Strengthening Czech banks' cybersecurity with TIBER-EU Framework
The Czech National Bank (CNB) has adopted the TIBER-EU framework to enhance cybersecurity in the financial sector. Developed by the European Central Bank, TIBER-EU facilitates simulated cyberattacks on critical systems, so institutions can assess and strengthen their defences.
This move aligns the CNB with other European regulators, underscoring its commitment to robust cybersecurity oversight. Financial institutions under CNB supervision now have to undergo penetration testing at least every three years, with selected entities participating in advanced testing annually. This initiative aims to bolster the Czech financial sector's digital resilience and reinforce public trust in its security and stability.
Amendment to the Act on Banks
On 16 October 2024, the Czech government discussed an amendment to Act No. 21/1992 Coll., on Banks, along with related laws, during a review process.
The amendment implements EU Directive 2024/1619 (CRD VI) and aligns Czech law with EU Regulation 2024/1623 (CRR III), marking the final step in adopting Basel III in the EU.
The legislative package also introduces a new harmonized European framework beyond Basel III, focusing on administrative sanctions, access to branches in third countries, supervisory authority powers in asset transfers, acquisitions, sales of significant credit institution stakes, mergers, ESG risks, and governance of management board members and key function holders.
Crypto tax reform: Simpler rules for investors
The Czech Parliament has approved legislation aligning cryptocurrency taxation with that of company shares. Effective 1 January 2025, individuals will be exempt from capital gains tax on digital assets held for over three years.
Additionally, annual crypto transactions under CZK100,000 (EUR4,000) won't require reporting. This reform aims to simplify tax obligations and foster a more crypto-friendly environment, positioning the Czech Republic as a progressive hub for digital assets.
New model provisions for Green Loans
On November 7, 2024, the Loan Market Association (LMA) introduced model provisions for green loans, designed to be incorporated into LMA-style facility agreements.
The provisions aim to enhance clarity and consistency on the green loan market, aligning with the LMA's existing Green Loan Principles and accompanying guidance. They serve as a foundational framework that can be tailored to specific transactions and sectors, offering detailed footnotes to help with drafting and negotiation.
Key features include requirements for borrowers to provide evidence for tracking and evaluating the use of green loan proceeds, and to consult with lenders before making any disclosures that label a loan as "green," mitigating the risk of greenwashing. The LMA anticipates that these provisions will bolster the integrity of green loan facilities and support the market's ongoing growth.
Digital economy
EDPB’s 2025 focus: Ensuring compliance with the right to erasure under GDPR
The European Data Protection Board (EDPB) will focus on the right to erasure of personal data under Article 17 of the GDPR in 2025.
National authorities, including the DPO, will monitor how organisations are ensuring this right. If processes aren't compliant, there's a risk of fines of up to CZK503 million (EUR20 million) or 4% of turnover, and an obligation to modify systems, train staff or delete data.
Common problems include non-processing of requests or poor information. For example, in 2022, one company was fined CZK2 million (EUR79,500) for failing to delete data ordered by the OCC. Review your procedures early so you're not caught off guard by an inspection
AI Act: Key obligations and bans take effect in 2025 to ensure responsible AI use in the EU
From 2025, the first obligations and prohibitions under the AI Act, the EU's key regulation on AI, will come into force. From February 2025, AI systems deemed unacceptable, such as manipulative technologies, mass biometric surveillance or social scoring, will be banned. These systems must be completely withdrawn from the market and operation across the EU to protect fundamental human rights.
New obligations will come into force for high-risk AI systems, including registration in a European AI database, ensuring transparency of algorithms and assessing compliance with safety standards. These rules are intended to reduce the risks associated with using AI in critical areas such as healthcare or transport and to provide a basis for the responsible and safe use of AI.
Court confirms validity of simple electronic signatures in private legal transactions
Case No. 54 Co 217/2024 confirms that a simple electronic signature is valid for private legal transactions if the obligation to prove the identity of the signatory and their will is fulfilled. In its decision, the court emphasized that the law considers this type of signature admissible and valid, with the assessment of its validity depending on other evidence. These may include direct and indirect evidence, such as the conduct of the parties in the performance of the obligation, which will usually prove the existence of the signed document and its content.
The decision shows that the plaintiff must bear the burden of proof not only as to the identity of the signatory but also as to their manifestation of intent. In the present case, the plaintiff met that obligation when the court took into account the context of the parties' conduct and the subsequent performance of the obligation. This case law strengthens legal certainty regarding the use of simple electronic signatures in practice.
Implementation of MiCA and DORA
The Act on the Digitalisation of the Financial Market and its accompanying amending act, which passed the third reading in the Chamber of Deputies, introduce the European MiCA and DORA regulations into the Czech legal system.
The Czech National Bank will become the key supervisory authority, conducting the licensing procedure under MiCA. The laws are set to take effect the day after their publication in the Collection of Laws, reflecting the need for swift implementation by 30 December 2024. Significant innovations also include the introduction of a value and time test for taxing cryptoassets, similar to the treatment of investment instruments, and the right of cryptoasset-related service providers (CASPs) to access payment accounts.
Other changes include the regulation of NFTs, with services associated with these tokens now requiring authorisation from the Financial Intelligence Authority, and the implementation of instant payments in euros. This will give payment and electronic money institutions access to systems with settlement irrevocability, such as the CNB's CERTIS system.
Litigation, restructuring and insolvency
Czech Class Action Act
The Czech Act on Mass Civil Proceedings (Czech Class Action Act) was approved and came into force on 1 July 2024.
Under this law, it's now possible to litigate disputes between consumers and businesses over rights or legitimate interests arising after 24 November 2020. Typically, the law allows representative action mainly in areas such as consumer contracts/consumer protection, privacy/data protection, and/or product liability.
The law is based on the principle of a representative action brought by a non-profit organization which doesn't distribute profits or other resources among its members, statutory or other bodies, founders, etc.
The law is based on the opt-in principle, where active action is required from consumers to join the proceedings initiated via representative action. Consumers can join the collective proceedings at the time of the filing of the representative action by the qualified entity or afterwards.
By way of a representative action, it will be possible to claim standard redress measures that are already recognised by the Code of Civil Procedure – ie generally financial or non-financial performance (eg repair, replacement) or determination whether a legal relationship or right exists.
The law goes beyond what the Czech legal framework currently offers in the field of disclosure. The court will have the option to order the counterparty or third person to produce relevant and narrowly specified evidence under its control if the party seeking such evidence has essentially exhausted the evidence available to it. If the third person fails to disclose the evidence without just cause, the court can assess the relevant issue being proved to the detriment of the party who was obliged to disclose it.
Modernization of Czech criminal law
A draft amendment to the Criminal Code, which comes with several changes, was approved by the Czech government on 13 November 2024.
The draft comes with a modernisation of criminal law that follows European trends while responding to some new phenomena in contemporary society. It aims, for example, to give victims more support and the chance to settle the relations with the offender (restorative justice). It also aims to streamline criminal proceedings and introduces changes to the punishment of minor crimes. It partially legalises self-growing and possession of cannabis and introduces quick and effective response to breaches of conditions for alternative sentences (eg suspended sentences) or wider support for the imposition of alternative sentences.

2025 Czech legal landscape: key trends and must-know insights
Energy & ESG
Renewables
The Czech Republic has implemented several updates in its regulatory framework to support renewable energy and align with the EU’s energy goals. One of the key recent developments is subsidy review and adjustment. Renewable energy projects commissioned between 2006 and 2015 will be assessed to ensure that the financial support they receive is proportional. The projects’ internal rate of return (IRR) must adhere to thresholds set by the government, ranging from 8.4% to 10.6%. This measure aims to prevent excessive compensation while ensuring alignment with EU regulations.
Current developments in the field of ESG
- Czech legislation obligates companies to report on the sustainability impacts of their activities according to EU regulations. Companies are preparing to meet the obligations under the CSR-Directive, which has been partially implemented in the Czech legal system by amending the Accounting Act. For the 2024 financial year, only large companies with more than 500 employees, ie corporations already subject to the reporting obligation under the NFRD, have to report on their ESG activities.
- In fiscal year 2025 other large companies that meet at least two of the three criteria will also have to report. The criteria are: more than 250 employees, a net annual turnover of more than CZK1 billion (EUR39,75 million) or assets worth more than CZK500 million (EUR39,75 million).
- After 1 January 2026, the obligation to include in the management report the information needed to understand the sustainability impacts of the business will be extended to medium and small companies.
- In 2024, the Czech Republic is intensifying efforts to align building emissions regulations with the EU's ESG objectives and climate commitments as stipulated by the EPB Directive.
- The focus is on enhancing energy efficiency and reducing carbon emissions in the building sector through robust renovation standards and strategic decarbonization initiatives. The specific change of the Czech legislation is not yet known. But the Czech legislation will also be forced to adopt changes to the legal system. Starting from May 30, 2026, residential and other buildings, private and public, will have to meet the obligations arising from EU law to reduce the energy use. The aim is to transform existing buildings into zero-emission buildings by 2050 at the latest. To prepare for the mandatory transformation of buildings from May 30, 2026, the national renovation plan, including support programs, must be known in 2025.
Employment
Self-scheduling of working hours
From 1 January 2025, employees will be able to self-schedule their working hours, not only when working remotely but also when they work at their employer's workplace.
Self-scheduling will be possible for employees with an employment contract and for employees working under an agreement to perform work or an agreement on work activity. To make use of this new option, the employee and the employer have to conclude a written agreement. The employer has to determine the compensation period in which the employee must work their fixed weekly working time on average and determine a fictitious working time schedule to be used, for example, in the event of the employee's illness.
Although this new option will bring great flexibility, working time will still need to be properly recorded. The basic restriction that a shift must not exceed 12 hours will also continue to apply. Employers should also bear in mind that night and weekend work is subject to additional payments.
Flexi-amendment to the Labour Code
The Chamber of Deputies of the Czech Parliament has started discussing a new amendment to the Labour Code, which aims to increase the flexibility of employment relationships. The draft could still change but currently it proposes the following changes:
- Employees on parental leave can continue to carry out the same type of work for the same employer as they did before taking leave, provided that a framework agreement exists which permits work outside the employment relationship. Additionally, employees who return from parental leave before the child reaches the age of two will be guaranteed a return to the same job.
- Notice periods will commence on the day the notice of termination is delivered to the other party. If the notice is issued due to the employee’s violation of work discipline or failure to meet the employer’s expectations or legal obligations (including underperformance), the notice period is shortened to one month.
- The maximum length of a mutually agreed probationary period can be increased by up to four months for ordinary employees and up to eight months for senior employees.
- There will be an increase in the number of cases where it's possible to agree with the employee that their salary will be paid in a currency other than the Czech currency.
- If the employment relationship was terminated on the grounds that the employee is no longer able to work due to an accident at work or an occupational illness, the employee will receive special compensation, which the employer can reclaim from the statutory insurance.
The amendment is set to be finalised early in 2025 and will enter into force in 1 April 2025.
Life science
Updates on illegal pharmaceutical websites and consumer safety
The State Institute for Drug Control has recently updated its list of illegal websites offering medicines, a key step in protecting consumers and ensuring pharmaceutical companies prevent the illegal distribution of their products through these platforms.
Annual report highlights: Growing focus on pharmaceutical advertising
The State Institute for Drug Control has also published its annual report for 2023. There was a notable increase in supervisory activities, with 122 investigations revealing illegal practices related to the advertising and sale of pharmaceutical products. Of these, 53% focused on print advertising, 45% on online advertising, and 2% on product samples. This trend highlights the growing emphasis by the regulatory body on online platforms, where pharmaceutical companies face increasing scrutiny. The rising importance of online advertising and websites as primary channels for promotion raises questions about how pharmaceutical companies can optimize their marketing strategies while complying with evolving regulatory requirements.
Modernizing advertising regulations in the pharmaceutical industry
The pharmaceutical sector is witnessing significant shifts, particularly in the realm of advertising regulations. Various stakeholders have voiced concerns that the current advertising regulations are outdated and fail to reflect recent developments such as digitalization and the evolving role of patients.
Proposed reforms in advertising regulation: Emerging trends and challenges
A draft amendment to the Advertising Regulation Act, proposed by the Ministry of Industry and Trade, is in its early stages. Discussions with various stakeholders are ongoing, but official legislation has not yet started. In the professional community, there's a noticeable trend towards softening these regulations. And many believe that the traditional division of advertising into healthcare professionals (HCPs) and the public is becoming obsolete. Given widespread digitalization, changes in the regulation of online advertising are anticipated. Some of the recent hot topics in this area include the use of influencers, engaging patient organizations (empowering patient organizations to communicate essential information directly to patients) and expanding the definition of healthcare professionals to include nurses.
As we conclude this edition of Legal Outlook and Trends for 2025, we invite you to stay connected with us for ongoing insights and updates.
If you would like more information on any of the trends discussed above or require assistance navigating the legal complexities in your specific industry, please do not hesitate to contact us.