New Withholding Tax Rate
Effective 1 January 2013, a new 35% withholding tax was introduced. The tax shall apply to payments of income to foreign tax residents who are not residents of
- another EU Member State; or
- the EEC; or
- a country which entered into a Double Tax Treaty with the Czech Republic; or
- a country which is a party to an effective TIEA (see above).
The General Tax Directorate issued information for natural persons and legal entities on how to prove tax residency for the purpose of determining withholding tax under the Income Tax Act.
The information is addressed to parties responsible for applying withholding tax. If a taxpayer fails to prove he/she is a Czech tax resident or another contract country’s tax resident, he or she will be considered a resident of a non-contract country on whom the 35% withholding tax shall be levied.
The Ministry of Finance lists support methods for proving tax residency status, such as via an ID for natural persons, registration of a registered office with the relevant public register for legal entities, or an affidavit for both. Should the party responsible for paying the withholding tax have any doubt regarding the tax residency of the person to whom it pays the taxable income, we recommend that it require the person to submit a tax residency certificate issued by the relevant authority in the relevant country.
Other articles
KŠB Assisted with the Refinancing of the BigBoard Group, a leading player in the premium outdoor advertising market
Our team provided legal advice to BigBoard Praha, a leading player in the premium outdoor advertising market in the Czech Republic, in connection with its refinancing. Founded in 1993, the BigBoard Group is the largest provider of premium outdoor advertising in the Czech Republic, with an approximately 70% market share and annual turnover of around CZK 2 billion. Its advertising media cover key locations across the country, including the Prague metro and major transport hubs.
KŠB Assisted Sandberg Capital with a Majority Investment in HotelTime Solutions
The KŠB team provided legal advice to the investment group Sandberg Capital on the completion of a majority investment in HotelTime Solutions, one of the leading providers of cloud-based software for hotel operations management.
KŠB assisted Seyfor with the extension of its financing provided by Raiffeisenbank, Tatra banka and, newly, Slovenská sporiteľňa.
The KŠB team provided legal advice to its long-standing client Seyfor in connection with the continuation and expansion of its syndicated financing. The existing lending banks, Raiffeisenbank Czech Republic and Tatra banka, decided to continue supporting Seyfor’s growth, with Slovenská sporiteľňa joining the financing as a new lender.
