General information - types of securities, deadlines, other market specifics - Czech Republic

Types of securities eligible in Clearstream

The eligible securities issued in Czech Republic are as follows:

Debt securities:

• Corporate bonds
• Government bonds
• Treasury Bonds
• Treasury bills

Equities:

• Ordinary shares

Types of beneficial owner

The following types of beneficial owners are recognised for tax purposes in Czech Republic:

• Residents of a DTT country
• EU/EEA pension funds
• EU/EEA residents
• Central Banks
• International and Supranational organisations
• Czech legal entities
• Czech individuals

Deadlines¹

Relief at source and quick refund deadlines

In order to benefit from relief at source/quick refund on Czech securities, eligible beneficial owners will need to ensure that we receive the accurate documentation by the following deadlines:

Debt securities

Equities

Reduced Statutory deadline for reclaiming withholding tax (only for certain payments processed until 30 June 2017)

Some issuers have decided to reduce their administration associated to the dividend payments and to apply these 60 days deadline. Even though this deadline represents a deviation from standard market procedure, it remains compliant with the local legislation as previously explained. Should this situation occur, we will inform our clients accordingly via a SWIFT notification.

Standard refund deadline

The deadline by which Clearstream must receive the documentation for a standard refund application is at the latest two months before the statutory deadline.

All reclaim applications received after this deadline will be processed by Clearstream on a “best efforts” basis. However, in such cases, Clearstream will apply an extra charge and accepts no responsibility for forms that have not reached the Czech Tax Authorities by the date considered to be the statute of limitations deadline.

When are refunds received?

The estimated time for receiving a refund is on average from 6 to12 months from the date on which the standard refund application was received by the Czech Tax Authorities. This timeframe can vary depending on when the application was filed and the complexity of the information supplied in the reclaim form.

Notes on tax reclaims

Clients warrant the completeness and accuracy of the information they supply to Clearstream.

It is the client's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream is under no obligation to carry out any investigation in respect of such information.

With respect to tax reclaims in general, clients are reminded that Clearstream accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.

Market specifics

Special case of tax withholding prior to dividend payment

In very rare cases, the Issuer/Paying Agent may decide to withhold the tax prior to the dividend payment. The debit of tax would not be reflected on clients’ account before the actual payment date, however, this market practice has a direct impact on clients’ certification deadlines. Indeed, the tax certification deadlines would be moved from a few days to a few weeks before the dividend payment date.

Additionally, clients failing to provide the tax documentation within the prescribed deadlines would only be able to recover the tax through a standard reclaim.

Should this situation occur, clients of Clearstream will be advised immediately via Swift clearly mentioning the certification requirements and the new applicable deadlines.

Redemptions payments

Czech redemptions are usually non taxable.

The only exception is for redemptions of short/term bonds which pay no coupon (such as T-bills and the short/term bonds issued by CEZ). For such bonds, the difference between the issue price and the redemption price would be taxed with 35% Czech withholding tax. In such case, the normal relief at source, quick and standard refund procedures apply.

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1. Clients are strongly recommended to verify the deadlines of each event in our tax notifications, as those may be subject to changes upon the request of the issuer.