A company director can rent their own apartment — or part of it — to their own limited company, and the arrangement works similarly in Slovakia and the Czech Republic, but the tax detail differs. In Slovakia the income falls under Section 6(3) of the Income Tax Act, with a EUR 500 annual exemption and no flat-rate expense option; in the Czech Republic it falls under Section 9 of the Income Tax Act, with a 30% flat-rate expense option. In both countries the rent is exempt from social and health contributions and must be set at an arm’s-length price, because the director and the company are related parties.
Why would a director rent property to their own company?
Many small limited companies actually operate from the director’s home, where administration is handled, calls are taken and documents are stored. If the company genuinely uses part of that space, it makes sense to formalise the arrangement: the director, as an individual, rents a precisely defined part of the property to the company, and the company pays rent for it.
The benefit is twofold. The company gains a legitimate deductible cost, and money that would otherwise sit in the company and be taxed on distribution reaches the director through a different, often more favourable regime. The mechanics, however, differ between Slovakia and the Czech Republic, so it pays to understand both.
How is the rental income taxed in Slovakia?
If the director rents the property without hotel-type services, it is not a trade and the income falls under Section 6(3) of Act No. 595/2003 Coll. It is taxed in the individual’s return on a progressive scale that, from 2026, runs at 19%, 25%, 30% and 35% depending on the tax base; ordinary rental income falls in the lowest 19% band. The first EUR 500 per year is exempt under Section 9(1)(g); above that threshold only the excess is taxed, and expenses must be reduced in the same proportion as the exempt income.
Slovakia does not allow flat-rate percentage expenses for this income — only actual, documented costs kept in tax records may be claimed. If the property is placed in business assets, the director may claim depreciation and a share of energy costs, but this also affects the tax position on a later sale.
How is the rental income taxed in the Czech Republic?
In the Czech Republic the income falls under Section 9 of Act No. 586/1992 Coll. and is taxed at 15% (23% on the part exceeding 36 times the average wage). Crucially, the Czech regime allows a 30% flat-rate expense deduction, capped at CZK 600,000 per year, as an alternative to actual costs. There is no equivalent of the Slovak EUR 500 exemption — Czech rental income is taxed from the first crown.
So the core idea is identical in both countries, but the levers differ: Slovakia offers a small exemption and only real expenses, while the Czech Republic offers a generous flat-rate deduction and no small-sum exemption.
Are social and health contributions payable?
No — in both countries rental income of this type is a passive income that is not subject to social or health insurance contributions. This is the main reason directors consider renting rather than simply drawing a higher salary: on a director’s remuneration, contributions add a substantial layer of cost that rent avoids entirely.
Example: if the company pays EUR 300 a month (EUR 3,600 a year) for an office in Slovakia, the director taxes EUR 3,100 after the exemption and pays no contributions on any of it. A comparable Czech arrangement at CZK 8,000 a month with the 30% flat rate leaves a base of CZK 67,200 taxed at 15%, again with no contributions.
Why does the rent have to be at market price?
The director and their own company are related parties in both jurisdictions — under Section 2 of the Slovak Act and Section 23(7) of the Czech Act. Transactions between them must follow the arm’s-length principle: the rent must match what unrelated parties would agree, neither inflated to shift profit out of the company nor set at a token level.
If the tax authority finds the rent departs from the usual price without justification, it can adjust the tax base and assess additional tax. The usual level should be supported — for instance by comparison with offers for similar space nearby.
What should the lease contain?
The foundation is a written lease between the individual as landlord and the company as tenant. It should clearly define the object of the lease including the exact floor area in square metres, the rent and how energy advances are settled, and the term and termination conditions.
A particular feature is that the same person stands on both sides — as landlord and as the company’s representative. This is a relationship where a conflict of interest can arise, so the terms should be transparent and well documented. A properly drafted lease and a reasonable rent are the best protection in a tax audit.
Not sure whether renting property to your own company pays off, or how to set it up safely under Slovak or Czech rules? We are happy to review the arrangement and prepare the numbers for you.
FAQ
Does the director pay contributions on rent from their own company?
No. In both Slovakia and the Czech Republic, rental income of this type is passive income that is not subject to social or health insurance contributions. Only income tax applies, after deducting the relevant exemption or expenses. This absence of contributions is the main reason renting can be more efficient than a higher director’s salary.
How do expense rules differ between Slovakia and the Czech Republic?
Slovakia does not allow flat-rate percentage expenses for Section 6(3) rental income — only actual documented costs — but exempts the first EUR 500 per year. The Czech Republic offers no small-sum exemption but allows a 30% flat-rate deduction capped at CZK 600,000, or actual costs including depreciation. The choice of country therefore changes which lever works better.
Why must the rent be set at the usual price?
Because a director and their own company are related parties, both Slovak and Czech law require transactions between them to follow the arm’s-length principle. Rent that is inflated or merely token can be re-priced by the tax authority, leading to an adjusted tax base and additional tax. Supporting the rent with comparable local offers is the safest approach.