Daně a legislativa ČR
Tax Implications of Portfolio Rebalancing
Key takeaways
- Every sale of a security at a profit is potentially taxable — rebalancing is no exception.
- If you sell positions held for more than 3 years, the holding-period test exempts the gain.
- The value test (up to CZK 100,000 in proceeds) can also exempt smaller rebalancing sales.
- Buying additional units instead of selling is a tax-neutral way to correct portfolio weights.
- Plan your rebalancing with the purchase date of each batch in mind.
Portfolio rebalancing — restoring the target asset allocation by selling overweight positions and buying underweight ones — can trigger a tax liability if you sell at a profit and the relevant positions have not yet satisfied the holding-period test.
When rebalancing triggers tax and when it does not
The decisive factor is the holding period of the position being sold. If you sell ETFs or shares you have owned for more than 3 years, the gain is exempt. If you have owned them for a shorter period, the gain enters the tax base — taxed at 15%. This is particularly important for younger positions purchased in recent years.
Tax-efficient rebalancing strategies
- Buy instead of sell: direct new contributions towards underweight asset classes — weights are corrected without any sale and without tax
- Rebalancing within DIP or pension savings: transactions within these schemes generally do not trigger an immediate tax liability
- Waiting to satisfy the holding-period test: if you are close to the three-year mark, it may be worth waiting a few months
- Value test: if your sales are small (up to CZK 100,000 in annual proceeds), no tax liability arises
Rebalancing and the CZK 40 million cap
From 2025, a cap of CZK 40 million applies to exempt proceeds from securities sales per year. For standard retail portfolios, this cap is unlikely to be reached, but for larger portfolios it is worth bearing in mind when planning an annual rebalance.
For more on rebalancing as an investment strategy, see the article on the term of the month — rebalancing. The principles of portfolio construction are described in how to build your first portfolio.
This article does not constitute tax advice. Rules may change — always verify the current conditions or consult a tax adviser. See also taxes on ETFs in the Czech Republic.
FAQ
Do I have to pay tax on every rebalancing sale?
Not every one. Selling a position held for more than 3 years is exempt under the holding-period test. Selling with total annual securities proceeds of up to CZK 100,000 is exempt under the value test. You only pay tax on sales that satisfy neither test.
How do I rebalance without triggering tax?
The simplest approach is to direct new contributions towards underweight asset classes rather than selling overweight positions. This way no tax liability arises. Rebalancing can also be done within a DIP, where transactions generally have no immediate tax impact.
What happens if I sell an ETF at a loss during rebalancing?
A loss from selling a security can be used in the tax return to offset a gain from other securities sales in the same year. It cannot, however, be applied against dividends or other income categories.