Tax Aspects of Profit Share Advances
How are the advances taxed? Unfortunately, the amendment to the Income Tax Act (ITA) did not sufficiently address such changes and therefore certain situations will be problematic for taxpayers.
Although it is not expressly set forth by the ITA, the tax regime for paying a profit share advance is most likely identical to the regime for paying out profits. But trouble may occur if – in the period between the payment of the profit share advance and the moment of settlement – a member is changed, for example, if the corporation does not generate a sufficient level of profit or the general meeting does not approve the dividends payment. The ITA does not specifically cover such situations. Who is the taxpayer in this case? Can a corporation apply to have withheld tax returned? There are no clear answers. Therefore, the act will most likely have to be changed or a clear standpoint from the General Financial Directorate will be necessary.
Other articles
Helena Navrátilová on Three Decades of the Advent Concerts of Good Will
KŠB partner Helena Navrátilová was recently interviewed on S dobrou vůlí, the podcast of the Committee of Good Will – Olga Havel Foundation. Speaking with editor Veronika Širc, Helena talked about the origins and history of the Advent Concerts of Good Will, which KŠB has been organizing for over thirty years.
KŠB advises the founders on the sale of the LIPOELASTIC Group
KŠB, in collaboration with investment advisers from the Roklen Group, advised LIPOELASTIC Group founders Alena and Tomáš Hradil on their exit from the group, which they had built up over almost twenty-five years.
Chemistry Brings People Together: KŠB at the 2026 Evening of Czech Chemistry
Czech chemistry and the chemical industry are built on innovation, responsibility and the people who drive the field forward. On Thursday, 22 October 2026, leading figures from the field and industry representatives came together at the Grand Hotel International Prague for the Czech Chemical Industry Association’s annual Evening of Czech Chemistry.
