Tax depreciation of assets in Czechia — how to depreciate a car, tech and equipment

When a company or a sole trader buys a car, a computer or a production machine, it usually cannot put the whole amount into costs at once. Most such assets serve for several years, so their price is spread into costs gradually — through depreciation. One threshold is decisive: if the acquisition price exceeds CZK 80,000 and the asset will be used for more than a year, it is a tangible fixed asset that is depreciated. Anything cheaper goes into costs straight away in the year of purchase.

Depreciation is thus the way an investment feeds into tax-deductible costs over the period the asset genuinely serves. It is important to distinguish tax and accounting depreciation: a company sets accounting depreciation according to actual wear and tear in its books, whereas tax depreciation is set precisely by the Income Tax Act (Act No. 586/1992 Coll.) — and it is the latter that reduces the tax base. This overview covers tax depreciation, because that is what you work with for corporate income tax.

What is depreciated and what is not

The first thing to assess with every purchase is the price. An asset with an acquisition price of up to CZK 80,000 (inclusive) is not, for tax purposes, a tangible fixed asset — its purchase is claimed as a one-off cost in the year of acquisition, regardless of whether it lasts two or five years. This threshold has applied since 2021 and covers, for example, cheaper laptops, phones or minor office equipment. Only above CZK 80,000 does an item become a depreciated asset.

A second important change concerns intangible assets — software, licences or valuable rights. Since 2021 intangible assets are no longer depreciated separately for tax; instead of special tax depreciation, their accounting depreciation is recognised as a tax cost, as the company posts it. In practice this means that when you buy software you follow accounting depreciation, not the table of depreciation groups below.

Depreciation groups — how long each asset is depreciated

Tangible assets are classified by type into one of six depreciation groups, and the group sets the minimum depreciation period. The classification is not left to the accountant's judgement — it follows from an annex to the Act. For ordinary company purchases, the first two groups matter most:

• Group 1 (3 years): computers, laptops, servers, office and IT equipment, some tools and instruments.
• Group 2 (5 years): passenger and utility vehicles, furniture, most machines and equipment.
• Group 3 (10 years): lifts, air conditioning and larger technological units.
• Groups 4 to 6 (20, 30 and 50 years): structures, buildings and utility networks.

A typical company car is therefore depreciated over five years, a laptop costing CZK 100,000 over three years, and office furniture again over five. The period is a minimum — you cannot depreciate faster, and you can only stretch it longer by interrupting depreciation, discussed below.

Straight-line or accelerated depreciation

For each asset the company chooses one of two methods at the first depreciation and keeps it for the whole period. With straight-line depreciation, the same share of the price is written off each year (only the first year's rate is lower). Example: a passenger car costing CZK 600,000 in group 2 is depreciated in the first year at 11% (CZK 66,000) and in the next four years at 22.25% (CZK 133,500 a year) — after five years it is fully written off.

With accelerated depreciation, coefficients are used and more goes into costs right in the early years. The same CZK 600,000 car would be depreciated by CZK 120,000 in the first year, CZK 192,000 in the second, and then by decreasing amounts down to zero in the fifth year. The total written off is the same; only the timing differs. Accelerated depreciation suits a company that wants to reduce profit sooner; straight-line suits one that wants to spread the cost evenly.

Special rules for cars

Two extra rules apply to passenger cars. First, the tax-deductible acquisition price is capped at CZK 2,000,000 — from a more expensive vehicle you depreciate at most two million, and the rest of the price is not tax-effective. Second, for zero-emission vehicles (electric and hydrogen cars) acquired from 2024 to the end of 2028, you can use extraordinary depreciation under Section 30a of the Act: the whole vehicle is written off in just 24 months — 60% of the acquisition price over the first 12 months and the remaining 40% over the next 12. The vehicle must be new and you must be its first depreciator; extraordinary depreciation is calculated monthly and cannot be interrupted. A company car also involves VAT deduction, which has its own rules.

Interrupting depreciation and why it helps

Tax depreciation is not an obligation you must claim every year. A company may interrupt it in any year and continue later — without losing the remaining value; the depreciation period simply lengthens by the skipped years. This pays off in a year when the company is loss-making or has low profit and the depreciation would be wasted; the cost is kept for a year when there is profit to tax against it.

The only exception is the extraordinary depreciation of zero-emission vehicles mentioned above — it cannot be interrupted and runs continuously for 24 months. For ordinary straight-line and accelerated depreciation, however, interruption is a legal and useful tool of tax planning.

Conclusion

Depreciation determines in which years an investment in a car, tech or equipment feeds into tax-deductible costs. For every purchase above CZK 80,000, then, be clear on three things: which depreciation group the asset falls into (a car and furniture over five years, IT equipment over three), whether you choose straight-line or accelerated depreciation, and whether it is worth interrupting depreciation in a weaker year. Order in these records is part of the order in paperwork that a credible registered seat gives a company in a carefully run house for just thirty companies.

Frequently asked questions

From what amount must an asset be depreciated, and what can I expense straight away?

The decisive figure is the acquisition price of CZK 80,000. Tangible assets with an acquisition price of up to CZK 80,000 inclusive are not depreciated — the purchase is claimed as a one-off tax cost in the year of acquisition. Only once the price exceeds this threshold and the asset will be used for more than a year must it be depreciated over several years according to its depreciation group.

How long is a company car and a computer depreciated for?

Passenger and utility vehicles belong to depreciation group 2 and are depreciated over five years. Computers, laptops and office IT equipment fall into group 1, with a three-year depreciation period. The period is a statutory minimum; you cannot depreciate faster, the only exception being the extraordinary depreciation of zero-emission vehicles over 24 months.

What is the difference between straight-line and accelerated depreciation?

With both, the full price of the asset is ultimately written off; only the timing differs. Straight-line depreciation puts almost the same amount into costs each year, while accelerated depreciation puts more into the early years and then decreasing amounts. The company chooses the method at the first depreciation of a given asset and keeps it for the whole depreciation period.