Emerging Markets Rates and Currencies Handbook
138 Citi | Emerging Markets Currencies Handbook 2021 Czech Republic Item Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equity 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 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 tax non-deductible. EU ATAD interest stripping rules on top of thin cap rules (extra interest expenses may be disallowed). Net borrowing costs tax deductible only up to higher of either 30% tax adjusted EBITDA, or CZK 80 mm p.a. (safe harbour clause).* Any tax non-deductible interest expense due to these rules may be carried forward for indefinite period and used as deduction in years where threshold not reached. Revaluation difference arising from the derivatives should be taxable/tax deductible Tax non-deductible Deductibility of FX losses Both realised and unrealized FX losses are tax-deductible (case-by-case review is recommended) Other taxes, duties Neither stamp duties nor transfer taxes apply Comments N/A N/A N/A N/A N/A * Borrowing costs include various interest-like expenses, e.g. deemed interest expenses included in hedging instruments and in financial leasing costs, interest capitalised in value of assets and subsequently included in tax depreciation, and FX costs related to interest. Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources. Subsidiary Funding — Tax Consideration Tax Summary — Czech Republic
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