Accelerated Tax Depreciation for Innovation Investments in 2026

25.5.2026 | ARROWS law firm

Investments in innovation—such as new machinery, robotics, or digitalisation—are key to maintaining companies’ competitiveness. Correct application of tax depreciation for fixed assets is essential for cost savings and minimising tax risks. This article explains how to use accelerated depreciation, how the current rules work, and how to combine them with innovation.

The illustrative image shows attorneys discussing the topic of tax depreciation of fixed assets.

Legal framework for depreciation and innovation in 2026
How tax and accounting depreciation works today
Where you can still use accelerated depreciation and other “faster” regimes
R&D deduction as a “second track” alongside depreciation
Tax strategy vs. audit risk: what to watch out for
How the tax authority looks at it: audit approaches and penalties
Model scenarios: how much you can realistically save (and where problems may arise)

Key takeaways:

Investments in innovation (machinery, technology, software) can significantly affect your tax burden if accounting and tax depreciation are set up correctly.
For tangible assets, you can choose accelerated depreciation or special regimes (e.g., extraordinary depreciation for zero-emission vehicles), improving cash flow in the first years.
For intangible assets and R&D projects, correct classification, documentation, and the ability to combine depreciation with the R&D tax deduction are key.
The biggest risks are incorrect classification of investments, conflicts with subsidies, and insufficient documentation, which may lead to additional tax assessments, penalties, and disputes with the Czech tax administration.

Legal framework for depreciation and innovation in 2026

In the Czech Republic, the rules for tax depreciation of fixed assets are governed by Act No. 586/1992 Coll., on Income Taxes (the “ITA”), and related accounting regulations, in particular Act No. 563/1991 Coll., on Accounting (the “Accounting Act”). Although partial changes have been introduced in recent years, the core principles of tax depreciation of fixed assets remain unchanged. If you last set your investment and depreciation strategy a few years ago, it is fairly certain it will need to be updated to reflect the current wording of the legislation and case law.

The ITA sets a value threshold for assets that must be depreciated for tax purposes. For tangible assets, this threshold is CZK 80,000. In practice, this means that an asset with an acquisition cost below CZK 80,000 can be claimed as a one-off tax expense, provided it meets the general conditions for tax deductibility.

More expensive tangible assets must be expensed gradually through depreciation. In the case of innovation, this typically affects higher-end IT equipment, more sophisticated machinery, industrial technologies, and larger software licences, which often exceed the threshold.

The system of six tax depreciation groups (1–6), linked to the [CZ-CPA] classification, still applies and determines the minimum depreciation period for individual types of assets. For example, most machinery and technologies fall into the 2nd depreciation group with a minimum depreciation period of 5 years.

The 3rd depreciation group (10 years) includes, for example, specialised machinery, while the 5th or 6th depreciation group (30 or 50 years) covers real estate. Most innovative assets—machinery, technology, IT—will therefore be depreciated for tax purposes over 5 or 10 years.

Tax depreciation is calculated annually, for the entire taxable period. Taxpayers still have the option to choose between straight-line and accelerated tax depreciation, and depreciation may be interrupted under certain conditions. Choosing the depreciation method is an important tax optimisation tool, as it allows you to influence cash flow in the first years of an investment.

It is important to distinguish that accounting depreciation and tax depreciation are not the same. Accounting depreciation reflects the economic wear and tear of an asset based on its actual useful life and serves to present the company’s financial performance as faithfully as possible.

Tax depreciation, by contrast, is a construct of the ITA and determines how quickly a business can transfer an asset’s acquisition cost into tax-deductible expenses. In practice, the difference between accounting and tax depreciation can be significant, especially for specific innovative assets such as software or R&D outputs.

Alongside tax rules, changes have also been made in accounting. An amendment to the Accounting Act, effective largely from 1 January 2024, introduced a new definition of size categories for accounting entities (micro, small, medium-sized, large).

These categories affect the audit obligation and the scope of the financial statements. The thresholds for assets, turnover, and number of employees were increased, allowing many companies to remain in a lower category even with higher turnover or balance sheet totals.

Although these changes are not directly about depreciation, they affect, for example, whether the financial statements will be subject to a mandatory audit—and therefore how much room a company has to “play” with depreciation schedules without the auditor challenging them.

The amendment to the Accounting Act also opens up broader possibilities for using international accounting standards, in particular IFRS. This is relevant for businesses with international investors or groups that report results under IFRS.

Depreciation policy in an IFRS environment can be significantly more flexible, but also more demanding in terms of proper setup and justification. This is precisely where the legal and accounting perspective connects with tax strategy, and it is very easy for even experienced management to overlook some of the interdependencies.

Our attorneys in Prague at ARROWS, a Prague-based law firm, often handle cases where entrepreneurs correctly identify the potential of innovation but underestimate the complexity of its accounting and tax treatment. Under the current legal framework, small formal errors can result in depreciation being disallowed for tax purposes or in unnecessary disputes with the tax authority. A timely review of investment and depreciation plans is therefore a sensible step for many companies even in 2026.

How tax and accounting depreciation works today

To meaningfully consider faster depreciation in the context of innovation, you first need to understand the basic depreciation mechanism. Fixed assets—tangible and intangible—are assets that a company uses for more than one year and whose value is not consumed in a single expense, but gradually wears out. Typically, these include production machinery, technology, vehicles, buildings, as well as software, licences, or R&D outputs. The aim of depreciation is to spread the acquisition cost of an asset over expenses so that it corresponds to the period of use while also complying with the ITA.

From an accounting perspective, fixed assets are depreciated according to a depreciation plan set by the accounting entity itself based on the expected useful life of the asset. Accounting depreciation should therefore capture the economic wear and tear of the asset as accurately as possible and does not have to match tax depreciation.

For intangible assets—such as software or know-how—accounting rules place emphasis on an expert estimate of the useful life. Accounting depreciation is calculated with monthly precision, usually from the month following the month in which the asset is put into use.

For tax purposes, it is crucial whether the asset meets the definition of depreciable tangible or intangible assets under the ITA and whether its acquisition cost exceeds the value threshold. For tangible assets, it is required that it is a separate item with a useful life longer than one year, used to generate, secure, or maintain taxable income.

The current threshold for tax depreciation of tangible assets is CZK 80,000. For assets below this limit, the acquisition cost can be claimed directly as an expense in the year of purchase, which can be very attractive from a cash-flow perspective for smaller innovative purchases (for example, individual laptops, smaller software).

The key point is that for new tangible assets, an entrepreneur still has the option to choose between the straight-line and accelerated methods of tax depreciation. Historically, the law allowed straight-line depreciation, where the asset is depreciated at the same rate over the entire period (except for the first year), and accelerated depreciation, where a higher amount is claimed in the first years and then gradually decreases.

Accelerated depreciation is a popular tax optimisation tool for movable assets, especially machinery and vehicles, because it allows the tax base to be reduced more quickly and improves cash flow in the first years of the investment. Tax depreciation is annual and, if the conditions are met, it can also be interrupted.

In recent years, there has been a fundamental change for intangible assets. As of 2020, the category of tax depreciation for newly acquired intangible assets was abolished in the Income Taxes Act (ZDP). Accounting depreciation of intangible assets is now tax-deductible, provided it reflects their economic useful life.

However, the Income Taxes Act (ZDP) contains specific rules, for example for tax depreciation of rights to intangible results of research and development acquired for consideration and for certain components of the acquisition price of a business enterprise. In practice, it will therefore be necessary to assess whether a particular intangible asset falls under the general regime of accounting depreciation for tax purposes, or whether a special ZDP regime applies to it, and to distinguish situations where the cost can be claimed as a one-off expense (for example, for cheaper licences or certain services).

From the perspective of innovative companies, it is important that most investments in modern technologies – production machinery, robotic lines, sophisticated measuring instruments, servers, industrial IT – fall under the existing system of depreciation groups, typically the 2nd depreciation group with a minimum depreciation period of 5 years. In combination with other tax support tools, such as the R&D tax deduction, the impact on the tax burden can still be very significant.

Where else you can use accelerated depreciation and other “faster” regimes

Although the basic principles of tax depreciation for most assets remain the same, there are situations where accelerated or exceptionally short depreciation can be used. In practice, you will encounter accelerated or faster depreciation in three main situations: for assets for which the accelerated method has been chosen, for zero-emission vehicles under the extraordinary depreciation regime, and under certain special regimes, typically in the energy sector. In addition, a certain form of “acceleration” can also be achieved through accounting depreciation, albeit without an immediate tax effect.

Classic accelerated depreciation for tangible assets

For tangible assets that you put into use, you can still choose the accelerated depreciation method, which makes it possible to achieve tax savings more quickly in the first years after the investment. Accelerated depreciation works in such a way that in the first year a higher portion of the input price is claimed thanks to special coefficients.

In subsequent years, depreciation is calculated from the residual value of the asset, so the depreciation amount gradually decreases. This model is attractive for innovative companies in particular because it allows the tax base to be reduced more quickly and improves cash flow in the first years after the investment, when the costs of implementing the technology are often the highest and the company needs as much free cash as possible.

It is necessary to consistently monitor how these assets affect the company’s overall tax position. Attorneys from ARROWS, a Prague-based law firm, often set up internal depreciation maps for clients in such situations so that management can see exactly which investments fall under which tax regime and what impact they have on the planned tax burden.

Extraordinary depreciation of zero-emission vehicles until 2028

A specific form of “accelerated” tax depreciation is extraordinary depreciation of zero-emission vehicles, which entrepreneurs can use for electric cars and other zero-emission vehicles acquired in the period from 2024 to 2028. As a standard rule, passenger cars are classified in the second depreciation group with a minimum tax depreciation period of five years, so the acquisition cost cannot be claimed at once but only gradually.

Extraordinary depreciation, however, allows zero-emission vehicles to be depreciated on a straight-line basis up to 100% of the input price within 24 months, by claiming 60% of the input price in the first year and 40% in the second year.

A key condition for applying extraordinary depreciation is, in particular, that it is genuinely a zero-emission vehicle, typically an electric vehicle or a hydrogen vehicle with zero CO₂ emissions, and that the taxpayer is the first depreciator. Extraordinary depreciation cannot be interrupted; it runs continuously for the entire two-year period.

At the same time, it is necessary to respect the limitation on the deductibility of depreciation for passenger cars with an acquisition cost above CZK 2 million, where depreciation on the amount above this threshold is not tax-deductible, which also applies to electric vehicles.

The VAT Act also limits the possibility to deduct VAT on passenger cars by providing an entitlement to deduction only up to the amount corresponding to a tax base of CZK 2 million; above this threshold, non-deductible VAT becomes part of the vehicle’s acquisition cost.

For innovative companies modernising their fleet and transitioning to zero-emission transport, extraordinary depreciation represents significant tax support. The short depreciation period reduces the tax burden in the first two years, when the costs of introducing e-mobility are the highest (charging infrastructure, internal processes, training).

At the same time, however, it is necessary from the outset to take into account the limit on the tax deductibility of depreciation for more expensive vehicles and to coordinate this, for example, with the structuring of employee benefits, because different rates of the employee’s non-monetary income apply to zero-emission cars (for example, 0.25% of the price instead of 1%).

The combination of extraordinary depreciation, limitations on tax deductibility, and employee benefits is a typical example of a complex situation that is best addressed with attorneys and tax advisors – and the attorneys at ARROWS, a Prague-based law firm, routinely prepare such structures for clients.

Special regimes and time-based depreciation (for example, photovoltaic power plants)

Another area where a specifically set depreciation period is used involves certain special regimes. For the technological part of photovoltaic power plants put into operation before certain legislative changes, time-based depreciation applied for 240 months, i.e., 20 years, in the form of a straight-line monthly depreciation charge without the possibility of interruption.

Later amendments introduced, for newer installations, the option to classify assets into depreciation groups and to choose between straight-line and accelerated depreciation, with the specific regime depending on the date depreciation begins and on transitional provisions.

For companies investing in their own renewable energy sources—whether rooftop photovoltaics on production halls or larger installations—it is therefore necessary to analyse in detail which legislative period the project falls under and which depreciation regime will apply. For some projects, a combination of standard tax depreciation in lower depreciation groups with support from subsidy programmes may be possible, for example from the Operational Programme Technologies and Applications for Competitiveness (OP TAK) or through interest-free loans from the National Development Bank.

At the same time, it is always necessary to bear in mind that received subsidies reduce the tax acquisition cost of the asset from which depreciation is calculated, so the nominal amount of the subsidy must also be reflected in the depreciation strategy.

Accounting “accelerated” depreciation and its role

In addition to tax depreciation, accounting depreciation can also play a significant role, especially for intangible assets and for assets where the law does not offer any special tax acceleration. Accounting depreciation is based on the expected useful life of the asset, and the accounting entity may decide on a shorter depreciation period if it is supported by actual economic wear and tear.

This may be relevant, for example, for technological innovations that become obsolete quickly (specialised software, unique equipment, experimental technologies), even if the statutory minimum tax depreciation period is longer.

From an accounting perspective, it may therefore be possible to “accelerate” depreciation of an asset, for example over three years, while for tax purposes it is necessary to comply with the five- or ten-year minimum for the relevant depreciation group, or to take into account specific rules for intangible assets.

The difference between the accounting and tax residual value must then be monitored and properly reported in deferred tax, and you should ensure that the depreciation plan is duly documented and defensible, for example before an auditor. Although accounting acceleration in itself will not bring an immediate tax saving, it may affect financial results, leverage ratios, negotiations with banks, or investor decision-making.

The attorneys at ARROWS, a Prague-based law firm, therefore often work in practice with accountants and auditors when setting depreciation plans not only from the perspective of the Income Taxes Act (ZDP), but also from the perspective of the Czech Commercial Code and the duty of management to act with due managerial care.

Investments in innovation: machinery, technology, software and research

Investments in innovation take many forms. Sometimes it involves acquiring a modern CNC machine that enables production with higher precision and lower error rates. Other times it involves implementing a complex ERP system, deploying AI tools, or building your own photovoltaic power plant on the roof of a hall. From a tax and legal perspective, it is crucial to correctly determine whether it is tangible or intangible property, whether it must be depreciated, and what depreciation period can and must be used.

Tangible assets: production technology, robotics and infrastructure

Tangible assets include standalone movable items, buildings, structures and sets thereof that have a useful life longer than one year and an acquisition cost above the statutory threshold (CZK 80,000). In the context of innovation, this typically includes new production machinery, robotic lines, specialised measuring instruments, logistics technologies, as well as infrastructure investments such as halls, warehouses, or energy installations. Most movable tangible assets for innovation fall into the 2nd depreciation group with a minimum depreciation period of 5 years.

Investments in production technologies are also often linked to subsidy programmes, for example calls under the Operational Programme Technologies and Applications for Competitiveness (OP TAK) Innovation scheme, which supports product and process innovation and makes it possible to obtain a subsidy for new machinery, technology and related software.

Such projects may be covered by a subsidy of 15–45% of eligible costs, but they require that the acquired technologies serve to introduce research and development results into production and that the project achieves at least a certain level of technological readiness (TRL). From a tax perspective, the subsidy must be reflected by reducing the tax acquisition cost of the asset from which depreciation is calculated, so that there is no double benefit.

For buildings and structures, the situation is more complex because longer depreciation periods apply to them. Administrative buildings, halls or hotels have historically been classified into higher depreciation groups (e.g., the 5th depreciation group with a minimum period of 30 years, the 6th depreciation group with a minimum period of 50 years).

Investments in real estate for innovation purposes (for example, a new development centre) therefore have a slower tax payback than investments in machinery or IT. When considering whether a particular intervention in a building constitutes technical improvement (which is reflected in the acquisition cost and depreciation) or a repair (which is expensed directly), it is necessary to proceed cautiously. Incorrect classification may lead to additional tax assessments and penalties, because technical improvements exceeding the statutory limit must be capitalised and depreciated.

Intangible assets: software, licences and research and development results

In the area of innovation, intangible assets are also of fundamental importance. These include software, licences, know-how, patents, intangible results of research and development, goodwill, or start-up costs. For software and other intangible assets that a company uses for more than one year and that have a higher value, it is necessary to assess whether they qualify as long-term intangible assets under accounting regulations and what depreciation period may or must be used for Czech tax purposes.

The tax rules for intangible assets underwent a major change in 2020, when the category of tax depreciation for newly acquired intangible assets was abolished in the Income Taxes Act (ZDP). Accounting depreciation of these assets is now tax-deductible, provided it reflects their economic useful life.

However, the Income Taxes Act (ZDP) sets out a specific rule in Section 32a(4) for tax depreciation of rights to intangible results of research and development acquired for consideration, which are depreciated on a straight-line basis over 36 months. Special rules also apply to certain components of the acquisition price of an enterprise. In practice, it is therefore essential to assess whether a particular intangible asset falls under the general regime of accounting depreciation for tax purposes, or whether a special regime under the Income Taxes Act (ZDP) applies.

For innovative companies, it is typical, for example, to acquire large-scale software solutions – ERP, CRM, PLM, MES, CAD/CAM – or to develop their own software products and AI models. In the case of purchasing a licence for consideration, if the price exceeds the threshold for long-term intangible assets under accounting regulations and the period of use is longer than one year, it will generally be an asset that must be depreciated for accounting purposes and whose depreciation will be tax-deductible.

In the case of in-house development, it is necessary to distinguish whether the costs relate to research and development that can be claimed under the R&D tax deduction, and whether the output constitutes an intangible asset that the company will use long-term and that must be depreciated for accounting purposes.

A specific topic is goodwill, i.e., the difference between the purchase price of an enterprise and the aggregate of revalued assets and liabilities upon the acquisition of a company. From an accounting perspective, goodwill is depreciated over its economic useful life, but no longer than 120 months (for entities that do not apply IFRS).

For Czech tax purposes, it forms part of the depreciation of components of the acquisition price of an enterprise and may be spread through tax-deductible depreciation over 180 months, provided the conditions of the Income Taxes Act (ZDP) are met (Section 32a(4)). In M&A practice, the setup of goodwill depreciation has a fundamental impact on the tax efficiency of the transaction, and it is therefore important that legal and tax teams structure the acquisition with these parameters in mind.

The R&D tax deduction as a “second track” alongside depreciation

Alongside depreciation, a significant tool for supporting innovation is the R&D tax deduction. Costs of research and development projects that meet the statutory criteria—especially an identifiable element of novelty and the existence of research or technical uncertainty—may be claimed by a company twice: once as a standard tax expense and a second time as a deduction from the tax base.

The current rules increase support for these costs so that, up to CZK 50 million, a deduction of 150% of eligible costs may be claimed, and above this limit, 100%. The time limit for claiming the deduction has been extended to five years, so the company may also claim the deduction retrospectively in subsequent tax periods.

In practice, an innovative company can therefore combine tax depreciation of long-term assets acquired as part of a research or innovation project (for example, prototype equipment, testing infrastructure, specialised software) with the R&D tax deduction for related payroll and other operating costs. However, it is crucial to correctly define what still constitutes a research project meeting the statutory criteria and to keep separate records of eligible costs.

The Czech Financial Administration places strong emphasis in this area on project documentation and the taxpayer’s ability to demonstrate the existence of an identifiable element of novelty and technical uncertainty. Attorneys from ARROWS advokátní kancelář are often involved in practice already when setting up processes for identifying and documenting R&D projects, so that clients can use the deduction safely while minimising the risk of it being challenged retrospectively during an audit.

Table of risks associated with innovation and depreciation

Potential issues	How ARROWS helps (office@arws.cz)
Incorrect classification of an investment: one-off expense vs. depreciated asset.	Legal and tax analysis: we will set the boundaries between operating expense, long-term assets and technical improvements, prepare internal methodology and review contracts so that the evidence for the tax office is clear and unambiguous.
Incorrect determination of the depreciation period for innovative assets (software, research infrastructure).	Expert opinion: we will assess the nature of the asset, recommend a safe depreciation period in line with the law and accounting standards, and prepare justification for the auditor and the Czech Financial Administration.
Conflict between subsidies and depreciation (double benefit, incorrect acquisition cost).	Project structuring: we will align subsidy conditions with the tax strategy, set the reduction of the acquisition cost by the subsidy, and ensure that state aid rules are not breached.
Risky use of the R&D tax deduction without a robust definition of projects.	Process setup: we will help define R&D projects, prepare project documentation, internal procedures and templates so that the deduction withstands an audit, and represent the client in the event of a dispute.
Inconsistent approach within a group (different depreciation in subsidiaries).	Group policy: we will prepare a consistent depreciation and investment policy for the entire group, including cross-border aspects thanks to the ARROWS International network, so that reporting and taxes align.

If you are considering a larger innovation project in your company and want to be sure it is set up consistently from a legal, tax and subsidy perspective, it makes sense to involve the attorneys from ARROWS advokátní kancelář already at the preparation stage. A simple consultation often reveals risks that would later materialise as additional tax assessments, repayment of subsidies, or project blockage.

Tax strategy vs. audit risk: what to watch out for

As soon as a business involves larger investments, higher depreciation and potential R&D deductions, the attention of the Czech Financial Administration naturally increases. In practice, tax audits often focus precisely on areas where there is greater room for interpretation—namely the classification of costs, correct depreciation, technical improvements, the use of subsidies and deductions. Faster depreciation of innovation should therefore be seen not only as an opportunity for tax savings, but also as a potential source of risk.

Typical mistakes in depreciating innovation

Among the most common mistakes is confusing repairs with technical improvements. A repair represents maintaining the original condition of an asset and its costs can be expensed directly, whereas a technical improvement increases the value of the asset, expands its functionality or changes its purpose and must be capitalised, i.e., added to the acquisition cost and depreciated.

With innovations, the line is often blurred—for example, modernising a production line may simultaneously extend its service life, increase capacity, and change the type of output. If such an intervention is incorrectly booked as a routine repair, the result may be an additional tax assessment and penalties.

Another typical issue is incorrect classification of tangible assets into a depreciation group, which affects the depreciation period. While, for example, some machines are depreciated over five years (2nd depreciation group), others fall into longer depreciation groups.

An error in classification may lead to depreciation that is too fast and a subsequent additional assessment, or conversely to unnecessarily slow depreciation and a higher tax burden than necessary.

A significant risk is also ignoring the limits for tax depreciation and VAT in relation to passenger cars. From 2024, tax-deductible depreciation of passenger vehicles in category M1 is allowed only up to CZK 2 million, and depreciation of the amount above this limit is not tax-effective.

The VAT Act additionally limits the entitlement to deduct VAT for these vehicles to an amount corresponding to a tax base of CZK 2 million, so for more expensive cars it is necessary to add the non-deductible portion of VAT to the acquisition cost. If a company does not take these restrictions into account when calculating depreciation, it exposes itself to the risk of an additional tax assessment and interest.

How the tax authority views it: audit approaches and penalties

The Czech Tax Code distinguishes between a procedure to remove doubts and a standard tax audit. The procedure to remove doubts is initiated before the tax is assessed and serves to quickly clarify individual discrepancies, for example an unusual increase in depreciation or claiming a large deduction.

A tax audit is a more comprehensive process focused on a specific tax and period, aimed at verifying the taxpayer’s tax obligations and preventing tax evasion. The tax administrator may initiate it only before the expiry of the three-year preclusive time limit for assessing tax, which may be extended depending on procedural steps.

Signals that may trigger the tax authority’s interest include long-term reporting of a tax loss, repeated filings of amended tax returns, unusually high VAT refund claims, or a sudden increase in tax-deductible expenses—for example in the form of rapidly increasing depreciation.

If discrepancies are identified, the tax authority may assess additional tax and impose penalties in the form of a penalty surcharge, amounting to 20% of the additionally assessed tax, or 20% when reducing a tax deduction and 1% when reducing a tax loss, plus default interest. These penalties are governed by Act No. 280/2009 Coll., the Czech Tax Code.

Case law of the administrative courts shows that the possibility to claim previously unclaimed depreciation retroactively is limited by the principle of continuity of depreciation. As a rule, the law does not allow “adding” depreciation retroactively for a period in which the taxpayer decided not to claim depreciation, while at the same time extending the depreciation period.

On the other hand, the courts have accepted that, under certain circumstances, depreciation may be claimed retroactively through a supplementary tax return, provided that the taxpayer does not change their originally expressed intention regarding the method and course of depreciation. In practice, this involves a very detailed assessment of the specific situation, where it is advisable to have experienced tax and legal representatives at your side.

How to prepare: documentation, processes, and legal support

From a risk management perspective, it is crucial to have complete documentation for significant investments—technology supply contracts, asset specifications, technical reports, commissioning/put-into-use protocols, internal depreciation schedules, decisions of statutory bodies, and any expert opinions.

As part of an audit, the tax administrator typically also requests accounting books, asset registers, bank account statements, and other documents showing the economic substance of transactions. For research and development projects, it will additionally require project documentation and ongoing records of the project’s implementation.

Attorneys from ARROWS advokátní kancelář can help clients set up internal processes so that every more significant investment in innovation has a clearly defined legal, accounting, and tax regime from the outset under Czech legislation.

In practice, this means, for example, creating an internal policy for cost classification, defining technical improvements, procedures for approving depreciation schedules, and templates for documenting R&D projects. During the audit itself, the attorneys represent the client, communicate with the tax authority, prepare responses to requests, and, if necessary, defend the client in court disputes as well.

For entrepreneurs and management, it is often essential to be confident that, when deciding on multi-million investments, they are on solid legal ground. One consultation before concluding contracts and recording assets in the accounts is usually far cheaper than dealing with a subsequent dispute over additionally assessed tax. If you want to be sure that your innovation projects will stand up even to a detailed audit, it makes sense to contact the attorneys at ARROWS advokátní kancelář via office@arws.cz.

Model scenarios: how much you can realistically save (and where problems may arise)

To better understand how depreciation and accelerated or extraordinary regimes work in practice, let’s look at several typical situations. These are not precise tax calculations, but an illustration of trends and connections that management should take into account when making decisions.

Scenario 1: A manufacturing company and a new robotic workstation

A mid-sized manufacturing company is considering an investment in a new robotic line worth CZK 20 million, which will replace part of the manual work and enable production with higher precision. At the same time, it is considering using the Innovation grant call under OP TAK, which could cover 30% of eligible costs if the project builds on completed in-house research and development and introduces an innovated product to the market.

The company can classify the line into the relevant depreciation group (typically the 2nd depreciation group with a minimum depreciation period of 5 years) and choose straight-line or accelerated depreciation, thereby achieving higher tax depreciation in the first years if it chooses the accelerated method.

At the same time, the subsidy will reduce the tax acquisition cost of the asset to approximately CZK 14 million, from which depreciation is calculated.

In practice, management may face a dilemma: is it worth implementing the investment in light of the current depreciation rules and potentially choosing accelerated depreciation, or is it more advantageous to wait for the grant call? The answer depends on a combination of factors—the amount of the subsidy, expected profitability, tax rate, financing options, and the group structure.

In similar situations, attorneys from ARROWS advokátní kancelář typically prepare alternative models and the legal framework for each option so that owners and management make decisions based on real data rather than intuition.

Scenario 2: Digitalisation and major software

A nationwide commercial company decides to implement a new ERP system, including modules for warehouse logistics management, CRM, production planning, and controlling. The licence and implementation price will exceed CZK 10 million, and the company will use the software for at least 5–7 years.

From a legal and tax perspective, the key question is whether this is the acquisition of long-term intangible assets (software) or a set of services that can be expensed directly.

If the contract grants the company a long-term right to use the software and the price exceeds the threshold for long-term intangible assets under Czech accounting regulations, it will typically be an asset that must be depreciated for accounting purposes, with depreciation being tax-deductible. Implementation services may be partially capitalised as part of the acquisition cost if they are inseparably linked to putting the software into use.

An additional layer is whether the development of certain modules constitutes research and development within the meaning of the Czech Act on the Support of R&D, for example if it involves entirely new algorithms or a specific integration solution.

In such a case, it may be possible to claim the R&D tax deduction for payroll and other costs incurred for internal development, in addition to the accounting depreciation of the software itself. In practice, however, it is necessary to carefully separate the project documentation for standard implementation from that for genuine research and development, so that the tax authority does not reject the deduction as a “mere” innovation without technical uncertainty.

Scenario 3: Transition to a zero-emission fleet

A logistics company or a business with a large vehicle fleet is considering a gradual transition to zero-emission vehicles. It plans to acquire several electric vehicles with an acquisition price of around CZK 1.8 million, to be used for business and service purposes. The vehicles are to be acquired between 2024 and 2028 in order to take advantage of extraordinary depreciation.

If the company meets the conditions—especially that it is the first depreciator and the vehicles meet the definition of a zero-emission vehicle—it can use extraordinary depreciation and depreciate 60% of the input price in the first 12 months and 40% in the second 12 months, i.e., a total of 100% over 24 months.

At the same time, it must respect the tax deductibility limit for depreciation of passenger cars up to CZK 2 million, which will not be an issue for vehicles priced at CZK 1.8 million, but for more expensive electric vehicles part of the depreciation would no longer be tax-effective.

Management therefore faces the question of how to spread purchases over time to maximise the use of extraordinary depreciation, respect the company’s financial capacity, and potentially also use subsidy programmes supporting zero-emission transport.

At the same time, it is necessary to align the depreciation strategy with the setup of employee benefits, because zero-emission vehicles provided to employees are subject to a different non-cash income regime than conventional internal combustion engine cars. ARROWS’ attorneys in Prague help clients in such situations to set up a comprehensive company car policy that takes tax, employment-law, and benefits aspects into account.

How ARROWS can help

Investments in innovation affect several areas of law at the same time—from corporate law through contracts, tax law, accounting, subsidies, to employment law and regulation in sectors such as energy or healthcare. Depreciation and accelerated or extraordinary regimes are only one piece of the puzzle. That is why it is advisable to have a partner who understands not only the legal provisions but also business reality and can connect the individual areas.

ARROWS’ attorneys in Prague assist clients, for example, with structuring investments in innovative technologies so that the contractual documentation aligns with tax and accounting plans.

In the purchase of machinery and technologies, in addition to standard supply contracts they also address liability for defects, SLAs for software solutions, and licensing arrangements. For energy projects such as photovoltaic power plants, they also focus on licensing and regulatory aspects.

In the area of taxes, ARROWS’ attorneys in Prague are involved in setting depreciation plans, assessing technical improvements, using extraordinary depreciation for zero-emission vehicles, and combining depreciation with the R&D tax deduction.

They prepare expert legal opinions that serve as support in negotiations with auditors and the tax administration. In the event of tax audits, they represent clients, prepare arguments against additional tax assessments, and handle appeal proceedings as well as court disputes.

Thanks to the ARROWS International network, ARROWS is also able to handle investments with an international element, for example when a group acquires technologies abroad, relocates research activities between countries, or structures the acquisition of a foreign startup. An additional advantage for clients is the high level of insurance coverage—ARROWS is insured for professional liability up to CZK 400,000,000, which is particularly important for large innovation projects with high financial volumes.

If you are considering a larger investment in innovation or a project is already underway and you are unsure about the depreciation setup, subsidies, and tax impacts, it makes sense to consult in good time. You can contact ARROWS’ attorneys in Prague at office@arws.cz and jointly set up a solution that stands up both economically and legally.

Final summary

The rules for tax depreciation and the possibility to use accelerated or extraordinary regimes remain an important tool for influencing companies’ tax burden. The current Czech system includes a CZK 80,000 threshold for mandatory depreciation of tangible assets, six depreciation groups, and the option to choose between straight-line and accelerated depreciation. Intangible assets are generally depreciated for tax purposes in accordance with Czech accounting regulations.

In addition to standard depreciation methods, there are also special regimes, such as extraordinary depreciation for zero-emission vehicles and specific adjustments for selected sectors or investments, creating a complex environment in which several different depreciation regimes may apply within a single company.

For entrepreneurs, management, and investors, this leads to two key takeaways. On the one hand, opportunities still exist to significantly influence the tax burden and cash flow of innovation projects through depreciation and R&D tax deductions.

On the other hand, the importance of correctly classifying investments, setting depreciation plans, documenting projects, and using subsidy schemes prudently is increasing, because tax authorities naturally focus on areas with a higher degree of complexity and potential for errors.

ARROWS has day-to-day experience with these situations—its attorneys help set the contractual, tax, and accounting aspects of innovation investments, prepare expert opinions, and represent clients in dealings with the tax administration and in court disputes. If you do not want to risk mistakes, losses, delays, or penalties and are looking for a partner who connects the legal, tax, and business perspective on your innovation projects, you can confidently contact ARROWS at office@arws.cz.

FAQ - Most frequently asked questions on investments in innovation and accelerated depreciation

1. What is the main difference in 2026 compared to previous years when it comes to accelerated depreciation?
The main difference lies in partial legislative changes in recent years; however, standard accelerated tax depreciation for tangible assets is still available. The basic threshold for mandatory depreciation of tangible assets is CZK 80,000, and the system of six depreciation groups applies. In addition, there are special regimes, such as extraordinary depreciation of zero-emission vehicles.

2. Is it worth accelerating—or, conversely, postponing—a planned investment in innovation because of depreciation?
Whether it makes sense to time an investment with depreciation in mind depends on the specific situation—the type of asset, available subsidies, current profitability, and financing options. Sometimes it makes sense to use accelerated depreciation to achieve a tax saving as quickly as possible; at other times it is more advantageous to wait for a subsidy call or for a period of higher profitability.

3. What are the biggest risks if we make a mistake when depreciating innovation-related assets?
The main risks include additional assessment of corporate income tax and, potentially, VAT, penalties of up to 20% of the additionally assessed tax, and default interest, as well as a possible obligation to repay a subsidy or part of the support. Errors may consist of incorrect classification of costs (repair vs. technical improvement), incorrect allocation of an asset to a depreciation group, failure to comply with limits for passenger cars, or risky application of the R&D tax deduction without sufficient documentation.

4. How does depreciation relate to the R&D tax deduction—are we at risk of “double dipping”?
Depreciation and the R&D tax deduction can be combined if the project’s capital and operating costs are properly distinguished. Typically, long-term assets (machinery, software) are depreciated, while payroll and other operating costs of the research project are also claimed within the R&D tax deduction, so this is not an impermissible double benefit.

5. Do we always need a Prague-based law firm to set up depreciation and innovation projects, or can an in-house accountant handle it?
For smaller and standard investments, a well-designed internal policy and an experienced accountant or finance manager are often sufficient, especially if there has already been an initial consultation with specialists. However, once it involves a larger innovation project, a combination of subsidies, the R&D tax deduction, extraordinary depreciation, or a company acquisition, engaging a Prague-based law firm is usually a sensible investment in risk prevention.

6. What if a tax audit is already underway and the tax authority is challenging our depreciation?
In such a situation, it is crucial to act quickly, have documentation ready, and have a well-thought-out strategy for communicating with the tax authority. Sometimes disputed points can be clarified within the procedure for removing doubts; in other cases, it is necessary to prepare detailed legal arguments and be ready for appeal proceedings or litigation.

Notice: The information contained in this article is of a general informational nature only and is intended for basic guidance on the topic under the legal framework as of 2026. Although we take maximum care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client security we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

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