#LifeInCzechia This year, several changes will be implemented by the Ministry of Finance of the Czech Republic. We’ve already summarized the most important ones about tax returns, but there are more. Find out more about the latest updates on mortgages, scooters, and vignettes in this article!
Keep an eye on the changes in 2024
Extension of Compulsory Liability Insurance to Mini Vehicles
The new law expands the types of vehicles that must have third-party liability insurance. This includes any vehicle with a top speed exceeding 25 km/h, or over 14 km/h if it weighs more than 25 kg, along with trailers.
The law specifies that motor vehicles are those primarily powered by an engine, such as electric scooters or Segways. Electric bicycles are excluded from this definition since they rely primarily on pedaling rather than a motor.
The concept of vehicle operation is redefined to cover any use of a transportation vehicle, regardless of its characteristics or the terrain it’s used on, whether it’s moving or stationary.
The responsibility for ensuring a vehicle is insured falls on the operator, not the temporary driver who borrows the vehicle, even in cases like short-term use of shared scooters.
Higher Fees for Vignettes and Its Regular Valorization
Starting March 1, 2024, the cost of the vignette will go up by CZK 800, rising from CZK 1,500 to CZK 2,300 annually. This adjustment will include a new routine indexation process to keep pace with inflation.
Since 2012, the vignette’s price has remained unchanged, causing its real value to decline due to rising prices. Because vignette fees are fixed and their value has eroded over time, it’s necessary to periodically adjust their prices to account for inflation. The price hike will be implemented through a cumulative adjustment.
You’ll pay more for vignettes
New Rules for Early Repayment of Mortgages
The amendment outlines new rules for repaying a mortgage early during a fixed interest period, starting September 1, 2024. It distinguishes between situations where the consumer has a valid reason, like facing hardship, versus merely wanting to optimize finances by switching to a lower-interest bank.
The proposal clarifies the compensation the bank can seek for early mortgage repayment during the fixed period. It allows for limited compensation covering administrative costs and part of the interest lost (interest differential). This differential is the interest the bank would have earned until the fixed period ends, minus what it would earn on a new similar loan. The amendment increases the compensation limit based on years left in the fixed period (up to 0.25% per remaining year) while capping overall compensation at 1% of the prepaid amount.
Early Repayment Situations
Consumers will keep their privilege of making early repayments without fees in challenging situations. This includes scenarios like:
- When covered by insurance to ensure loan repayment
- After the fixed interest rate period ends
- Within three months of the bank announcing a new interest rate
- In case of the customer’s or spouse’s death, long-term illness, or disability
Additionally, the new option for fee-free early repayment will also cover:
- Divorce proceedings, including the division of marital assets
- Selling the property at least two years after purchase
Furthermore, consumers can annually repay up to a quarter of the original mortgage amount without charges on the contract anniversary.
These rules apply to new mortgage agreements starting September 1, 2024. For ongoing agreements, they affect early repayments during the fixed interest period after this date.
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Source: MFČR
