Czech Republic: Tax changes expected in 2021


The Czech Ministry of Finance is currently in the process of amending laws in the taxation area that would be part of and published in the Collection of Laws of the Czech Republic.

If approved by the Czech Parliament, these amendments will impact the following:

Government bonds

The interest income from bonds issued by the Czech Republic government as well as other EU/EEA member states will be exempt from tax in the Czech Republic.

This exemption from Czech Republic government bonds would apply to all types of investors, foreign and resident in the Czech Republic.

Zero-coupon bonds

This new rule would apply to bonds issued as of 1 January 2021. While currently income from zero-coupon bonds paid at maturity are subject to withholding tax in the Czech Republic, the amendment, if approved, would cancel this withholding tax. Instead, investors would have to register to tax in the Czech Republic and file a tax return in the Czech Republic to tax the income. The tax base would be calculated as the difference between the nominal value (or early repayment price) and the acquisition price. If the investor is not resident in the EU or EEA, the issuer will withhold a “tax securing” of 1% calculated from the nominal value of the bond. For investors from a country which has a double tax treaty with the Czech Republic, the tax treatment should apply according to the articles of the relevant double tax treaty.

Further information

We continue to monitor the Czech market for new developments and will provide more information as it becomes available.

For further information, customers may contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or their Relationship Officer.

This Taxflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Taxflash is at the customer’s own risk and Clearstream Banking S.A. its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions