Emerging Markets Rates and Currencies Handbook

Citibank Europe plc organizacni slozka Bucharova 2641/14, 158 02, Praha 5 FX Sales Contact: +4202 3306 1436 Tax Summary – Czech Republic Czech Republic Country Tax Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equities W/H Tax • 15% WHT • Under certain tax treaties can be reduced • Increased 35% WHT to tax payers that are NOT tax residents in EU Member state /state of the European Economic Area (EEA), nor country that concluded an effective DTA / an effective bilateral or multilateral tax information exchange agreement (TIEA) with the Czech Republic. 35% WHT applies to undisclosed recipients • No WHT • 15% WHT on cash settlements classified as income from investment instruments (tax base should not include the value of the underlying asset) • Under DTAs may be reduced • 35%WHT applies to tax payers that are NOT tax residents in EU MS / state of the EEA, nor country that concluded an effective DTAs / an effective bilateral or multilateral TIEA with the Czech Republic. 35% WHT applies to undisclosed recipients • 15%WHT on dividends • Under certain tax treaties may be reduced • 35% WHT on dividends to tax payers that are not tax residents in EU MS / state of the EEA, nor country that concluded an effective DTAs / an effective bilateral or multilateral TIEA with the Czech Republic. 35% WHT applies to undisclosed recipients Deductibility of interests • Generally deductible if incurred to assure, generate or maintain taxable income and only if the respective expense relates in nature and timing to the in respective taxation period. • Thin cap rules: Deductibility test on financial cost on related party loans (interest plus other related costs, e.g. bank fees). • Financial expenses above Debt-to-Equity ratio of 4:1 (6:1 for selected FIs) is non- deductible. • Financial expenses incurred on profit- • Generally deductible if incurred to assure, generate or maintain taxable income and only if the respective expense relates in nature and timing to the in respective taxation period. • Thin cap rules: Deductibility test on financial cost on related party loans (interest plus other related costs, e.g. bank fees). • Financial expenses above Debt-to-Equity ratio of 4:1 (6:1 for selected FIs) is non-deductible. • Financial expenses incurred on profit- participating loans are • Revaluation difference arising from the derivatives should be taxable / tax deductible • Tax non- deductible