Investor Presentaiton

Companies are exempt from tax on capital gains from the sale of shares in a subsidiary resident in the EU, EEA or a country which the Czech Republic has concluded a double tax treaty with and which has a corporate tax rate of at least 12 percent as long as the shares have been held for at least 12 months. Qualifying holdings are defined in the same way as for the dividend exemption. There is no tax consolidation in the Czech Republic. Each company within a group is taxed individually, with no possibility to set-off losses against the profits of a different company. However, virtual tax consolidation can be achieved through a partnership structure. Dividends received by Czech resident companies from non- residents are taxed at a rate of 15 percent. Dividends received by a Czech parent company or a permanent establishment of an EU company from subsidiaries registered in EU and EEA countries, or Switzerland are tax exempt provided that certain conditions are met (e.g. specific legal form, minimum 10-percent shareholding, 12-month uninterrupted holding of the shares, entities not tax exempt). Dividends received from subsidiaries which are resident in other countries that have entered into double tax treaties with the Czech Republic are also exempt as long as the profits have been subject to a corporate tax of at least 12 percent (in addition to the above conditions stipulated for EU companies). Dividends paid to a parent company registered in the Czech Republic, an EU or EEA member state, or Switzerland are not subject to withholding tax provided that certain conditions are met (e.g. specific legal form, minimum 10-percent shareholding for 12 months, entities not tax exempt). 75

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