Daně a legislativa ČR
What Is the Holding-Period Tax Exemption for Mutual Funds
Key takeaways
- Profit from selling a mutual fund or ETF is exempt from income tax after 3 years of holding.
- The value test (up to CZK 100,000 in annual proceeds) also applies to funds and can be combined.
- From 2025, the holding-period exemption is capped at CZK 40 million in annual proceeds.
- Dividends and income from distributing funds are not covered by the holding-period test — they are always taxed at 15%.
- Reinvestment within an accumulating fund does not trigger a tax liability.
The holding-period tax exemption for mutual funds states that if you hold mutual fund units or ETFs for more than 3 years, any profit from their sale is exempt from income tax. The rule applies to natural persons who are Czech tax residents and covers the vast majority of funds tradeable in the Czech Republic.
How exactly the three years are counted
The decisive factor is the purchase date of each specific batch of fund units. If you invest on a regular basis using DCA, each purchase has its own "start date". A batch bought in October 2023 will satisfy the holding-period test in October 2026 — a batch from April 2024 not until April 2027.
The value test as an alternative
You don't need to wait three years. If your total proceeds from the sale of securities and mutual funds for the year do not exceed CZK 100,000, the profit is also exempt. Both tests — value and holding-period — can be combined in a single year: some sales satisfy the holding-period test, the rest the value test.
The cap from 2025
From 2025, the holding-period exemption applies to a maximum of CZK 40 million in annual sale proceeds. Proceeds above this limit are taxed in the normal way. This change primarily affects larger portfolios.
- Accumulating funds and ETFs: reinvestment within the fund triggers no tax liability whatsoever
- Distributing funds: paid-out dividends and income are taxed at 15% regardless of holding duration
- Money market funds: the holding-period test applies in the same way as for equity funds
More on choosing between accumulating and distributing funds is offered in the article accumulating vs. distributing ETFs.
This article does not constitute tax advice. Please verify the current rules or consult a tax adviser. See also taxes on ETFs in the Czech Republic.
FAQ
Does the 3-year holding-period test also apply to ETFs?
Yes. ETFs are treated the same as mutual fund units or shares under the Income Tax Act. The 3-year holding-period test applies equally — after satisfying it, the profit from the sale is exempt from tax.
What happens if I sell the fund before three years?
You will tax the profit as capital income at 15%, unless you simultaneously satisfy the value test (total securities sale proceeds up to CZK 100,000 per year). The tax base is the sale price minus the acquisition cost.
How does the holding-period test work with DCA?
Each purchased batch has its own purchase date. The test is calculated separately for each purchase. Some batches may therefore meet the holding-period test and be exempt, while more recently purchased batches do not.