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New Accounting Act for Real Estate: Accounting in Euro

8. 2. 2023Ludmila Benešová

As you may have noticed, a proposed new Accounting Act is being discussed in the Czech Republic, with planned implementation as of 1 January 2024. Although 2025 seems more realistic, the new Act is highly esteemed by Czech accounting professionals. TPA have written about the reasons for the new Accounting Act here: We have further informed in our newsletter about a widely-discussed possibility of accounting in a functional currency (such as Euro) under the new Accounting Act. Please see more details here:

For the real estate industry, having the accounting in a functional currency will be widely welcomed. Many projects in the Czech Republic have Euro-denominated leases as well as Euro-denominated financing. Thus, in our opinion, the conditions of a “primary economic environment” in accordance with IAS 21 may be met and such real estate SPVs will have the option to switch their books into Euro. That will surely avoid many unpopular side-effects of accounting in Czech Crown, such as large FX gains and losses, a strongly fluctuating financial result and unexpected ups and downs in tax basis.

This change may even attract new investors to enter the Czech real estate market. The last major element of currency risk will be gone and the Czech real estate market may enter the Euro zone years before the rest of the Czech Republic does. So much the better…

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