Daně a legislativa ČR
Donating Shares and ETFs Within the Family
Key takeaways
- Donating securities to close relatives (direct line) is usually exempt from tax.
- The recipient must correctly establish the acquisition cost and tax base on a later sale.
- For the recipient, the holding-period test generally starts from the date of the gift, not the original purchase.
- Donation cannot be used as a way to avoid paying tax on a gain — the law accounts for this.
Donating shares, ETFs or other securities to close relatives is usually exempt from income tax in the Czech Republic — but the tax implications do not disappear, they simply shift to the recipient at the time of sale.
Who counts as a "close relative" for tax purposes
The Income Tax Act exempts gratuitous income (gifts) in the direct line — from parents to children and vice versa, between siblings and between spouses/partners — and also between persons sharing a household. Donations outside these circles (e.g. to a friend or cousin) may be subject to tax. The exact definition depends on the current wording of the law.
What happens to the recipient's taxes
The gift is exempt, but the recipient also takes on the "tax history" of the position. On a later sale:
- The tax base is calculated as sale price minus acquisition cost — and this needs to be established correctly (typically either the price at which the donor bought the securities, or the market value on the date of the gift — verify with an adviser)
- The holding-period test for the recipient generally starts from the date of receipt of the gift, not from the donor's original purchase
- The recipient therefore needs to hold the securities for a further 3 years from the gift for the sale gain to be exempt
Donating as a way to "transfer" a portfolio to children
Parents sometimes consider transferring a portfolio to their children as a form of estate planning. This is a legitimate strategy, but it is not a way to avoid paying tax on the gain from the sale — when the child later sells, the gain will be taxable, it is simply deferred or may be exempt under the holding-period test. When donating, it is always worth also considering the inheritance and notarial aspects.
A comparison with inheritance rules is in the article inheriting an investment portfolio and taxes. The tax basics are summarised in taxes on ETFs in the Czech Republic.
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
Is donating shares to children exempt from tax?
Donating securities in the direct line (parent–child) is usually exempt from income tax in the Czech Republic. The exemption, however, only covers the moment of the gift — when the recipient later sells, a tax liability may arise.
How does the recipient pay tax on the sale of gifted shares?
The tax base is the sale price minus the acquisition cost. The acquisition cost is typically either the price at which the donor bought the securities, or the market value on the date of the gift. The exact rule depends on the current interpretation — consult a tax adviser.
From when does the recipient's holding-period test start running?
Generally from the date of receipt of the gift — not from the donor's original purchase. The recipient therefore needs to hold the securities for a further minimum of 3 years from the date of the gift for the sale gain to be exempt.