Status as of 1 October 2026: draft law in the inter-ministerial comment procedure. Proposed effective date 1 July 2027. Details may change.
The Czech government has presented a draft act on the conditions for innovative and scalable business, known as the Startup Act. Its headline tax measure: an individual who invests cash into a certified startup could deduct the investment from their personal income tax base, up to CZK 5 million per year (Government of the Czech Republic, 27 Aug 2026).
Which companies qualify as a “certified startup”
The Act does not create a new type of company. It introduces a status that a company must apply for. The proposed conditions include:
- the company is at most 8 years old (up to 10 years for selected deep-tech projects),
- annual net turnover of no more than CZK 250 million,
- it is not a purpose-built or majority-owned part of an established business,
- it is not traded on a regulated market,
- it does not distribute profit or other equity to its shareholders,
- an expert assessment of the product or prototype, market validation, scalability, competitive advantage, team and traction.
Certification is to be handled by the new state agency CzechBusiness, with the Ministry of Industry and Trade acting as the appeal and supervisory body.
How the investor deduction should work
- Who: individuals (“business angels”) investing in early-stage certified startups.
- What: cash investments only. The design restricts non-cash contributions.
- How much: up to CZK 5 million per year, deducted from the income tax base.
- Where in the law: a new § 15d of the Income Tax Act is proposed for this deduction.
- How to claim it: according to the current draft, the deduction will not be available through the employer’s annual tax reconciliation. Investors will have to file their own personal income tax return.
The government says the exact parameters will be confirmed during the legislative process. The draft also proposes a longer period for startups themselves to use tax losses.
The catch: the deduction can be clawed back
If it later turns out that the startup did not meet the certification conditions, or breached them, the investor will have to pay tax on the deduction previously claimed. The draft has not yet settled exactly how; one option being discussed is taxing it as “other income” under § 10 of the Income Tax Act.
What to do now
Nothing changes for your 2026 or 2027 tax planning yet. The law has not been passed, and the government is aiming for an effective date of 1 July 2027. If you plan to invest in a startup in 2027, keep documentation of every cash payment and check whether the company holds certification at the time you invest.
This article is general information, not legal or tax advice for your specific situation.