Generally, yes. An individual’s income from transferring a share in an s.r.o. or limited partnership, or cooperative membership rights, is other income under Section 8(1)(f) of the Income Tax Act. Tax applies to the difference between income and expenses, with the capital contribution or acquisition cost treated as an expense. A loss cannot be claimed, and the exemption is limited.
What type of income is it?
Income from transferring an interest or share in a limited liability company, a limited partnership or cooperative membership rights is other income under Section 8(1)(f) of the Income Tax Act. Taxable income is included in the tax base after deducting demonstrably incurred expenses.
There is an important restriction: if expenses exceed income, the excess is disregarded. You therefore cannot claim a tax loss on selling a share, even at far below its acquisition cost (Section 8(2)).
If the share was included in your business assets at the time of sale, the position differs: it is business income under Section 6.
What can you deduct?
Under Section 8(7) of the Income Tax Act, the expense is the capital contribution or acquisition cost of the share.
The concept of a contribution is broader than most shareholders realise. Under Section 2(ac) of the Income Tax Act, it includes:
- Cash and non-cash contributions to share capital.
- A contribution to the capital contribution fund paid by the shareholder.
- A mandatory additional contribution to the reserve fund or a cooperative’s indivisible fund, and share premium paid by a shareholder.
- An increase in share capital from after-tax profits for periods in which profit distributions were outside the scope of tax.
Contributions to the capital contribution fund are often overlooked in practice, although they reduce the tax base just like the original contribution.
If you acquired the share by inheritance or gift, the expense is its value under Section 25(1)(c) at acquisition. For inheritance, this is the court-determined value; for a gift, the expert valuation.
When is the income exempt?
The exemption is narrow. Under Section 9(1)(i) of the Income Tax Act, aggregate income under Section 8(1)(d) to (f), less expenses, is exempt if it does not exceed €500 in the tax period. Above that amount, only the excess enters the tax base.
This is a shared limit with rental income and occasional activities under Section 9(1)(g). If it has already been used there, none remains for the share.
From 1 January 2024, this exemption does not apply at all to income from transferring an s.r.o. share or securities that:
- Were the taxpayer’s business assets, regardless of how long ago they were removed from those assets; or
- Were acquired as a non-cash benefit under Section 5(7)(q) or Section 9(1)(p), meaning an employee or contractor share.
A special rule applies to shares acquired long ago. For a share acquired by 31 December 2003, the transitional provision in Section 52(21) applies the exemption under the rules effective until the end of 2003, which exempted income after five years from acquisition. We therefore ask about the acquisition date at the start of every transfer.
Beware the myth of a three-year holding test
Articles and client discussions still repeat the claim that income from selling an s.r.o. share is exempt after three years of ownership.
That rule is not in the law. Act No. 309/2023 Coll. did approve it as Section 9(1)(r) of the Income Tax Act, with effect from 1 January 2024, and the Financial Administration described it in guidance issued in August 2023.
It never took effect. The consolidation package, Act No. 530/2023 Coll., promulgated on 30 December 2023, repealed it beforehand. Today’s Section 9(1)(r) concerns government bonds for individuals, and the transitional provision cited in the earlier guidance does not exist in the Act. The transitional Section 52zzz(3), inserted by the consolidation package, refers only to points (i) and (k) for shares and securities.
If someone plans your share sale around a three-year holding test, that plan relies on a provision that is not in force.
Instalments, advances and marital property
If the price is paid in instalments, or you receive an advance, income is taxed in the period in which it is received (Section 8(4)). This also applies to payments under an agreement for a future transfer.
Expenses exceeding instalments received in the first year may be deducted only up to that year’s income. The remainder carries forward until used up (Section 8(8)). An instalment schedule or earn-out therefore spreads the tax too, but expenses cannot be deducted ahead of the income.
If the share forms part of marital community property, income and expenses are divided equally unless the spouses agree otherwise (Section 4(8)). That agreement provides legitimate scope to determine which spouse uses the exemption. If the share was included in one spouse’s business assets, however, the spouse who last held it as a business asset is taxed (Section 8(16)).
How we address this in a transfer
We examine tax implications before signing because they affect the price and payment structure. We prepare the transfer agreement, approvals and Commercial Register filing through our business share transfer service. A whole-company sale involving due diligence and warranties falls under company sale and acquisition.
We are not tax advisers and do not file your tax return. We identify the consequences early and adapt the transaction accordingly, bringing in a tax adviser where needed before the agreement is signed.
This answer provides general information on the law as at 9 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
