Investor Presentaiton

Foreign source income of Czech resident com- panies is generally taxable in the Czech Repub- lic, subject to the provisions of any double taxa tion treaties. The income of foreign branches or permanent establishments of Czech residents is included in their taxable profit. Dividends from foreign companies are a separate source of income taxable at a special rate of currently 15 percent, unless the Parent-Subsidiary Direc- tive applies. Under certain double taxation treaties, howev- er, the foreign income of Czech residents is ex- empt from Czech tax. In such cases, expenses related to that income are not tax deductible. Credit for foreign taxes on income that is also subject to Czech tax is available only if adouble taxation treaty exists with the other state. Oth- erwise, the foreign tax can only be treated as an expense. The main types of Czech source income for non-residents are: income of a permanent establishment in the Czech Republic; -income from a dependent activity (employment) performed in the Czech Republic; -income from services provided in the Czech Republic; -income from the sale or use of real estate situated in the Czech Republic; ― royalties, dividends and other profit distributions, interest, and lease rentals; ― income from the transfer of shares in Czech resident companies not tax exempt under domestic legislation; ― income from the sale of a business as a going concern located in the Czech Republic. These tax liabilities are to some extent miti- gated by tax treaties, where applicable. In par- ticular, if there is a treaty in place, then: ― Income from services can usually be taxed only if the service provider has a permanent establishment in the Czech Republic. - Income from employment can usually be taxed only if the employee is employed by a Czech company or a Czech permanent establishment of a foreign company, or if they spend more than 183 days in the Czech Republic. Income liable to tax is generally subject to with holding taxes at a rate of 15 percent. The rate is increased to 35 percent if the income is paid to residents of countries which have not signed a double taxation treaty with the Czech Repub- 64

View entire presentation