General information - types of securities, deadlines, other market specifics - Czech Republic
Types of securities eligible in Clearstream Banking
The eligible securities issued in Czech Republic are as follows:
Debt securities:
- Corporate bonds
- Government bonds
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
Relief at source | Deadline |
Per-payment instruction | At the latest, seven business days before the payment date by 10:00 CET. |
Original certificates | At the latest, nine business days before the payment date by 10:00 CET. |
Quick refund | |
Original certificates | At the latest, the 13th calendar day of the month following the payment date (if the 13th is not a business day, the deadline is the last business day before the 13th). |
Equities
Relief at source | Deadline |
| Per-payment instruction | At the latest, seven business days before the payment date by 10:00 CET. |
Original certificates | At the latest, nine business days before the payment date by 10:00 CET. |
Quick Refund | |
Original certificates | At the latest, 13 business days before the payment date by 10:00 CET. |
Statutory deadline for reclaiming withholding tax
- For payments processed until 30 June 2017
Unless otherwise stipulated in the tax treaty, the statutory deadline for reclaiming withholding tax is three years after the end of the calendar year in which the payment was made.
- For payments processed as of 1 July 2017
The statutory deadline for reclaiming withholding tax is two years (24 months) from the income payment date.
Reduced Statutory deadline (only for certain payments processed until 30 June 2017)
In rare cases, the statutory deadline may be reduced from three years to 60 days, depending on the issuer. According to Czech Tax Code, Article 237 of the Act nr. 280/2009, if the receiver of the income has any doubts or questions related to the tax withheld, a request can be sent to the institution (in this case, the issuer) within 60 days from the payment date. If this deadline is met, the issuer has a 30 days period to answer/process the request.
Some issuers have decided to reduce their administration associated to the dividend payments and to apply this 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 customers accordingly via a SWIFT notification.
Standard refund deadline
The deadline by which Clearstream Banking 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 Banking on a “best efforts” basis. However, in such cases, Clearstream Banking 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 to 12 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
Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the customer'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 Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, customers are reminded that Clearstream Banking 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 customers’ account before the actual payment date, however, this market practice has a direct impact on customers’ certification deadlines. Indeed, the tax certification deadlines would be moved from a few days to a few weeks before the dividend payment date.
Additionally, customers 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, customers 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. Customers 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.