DIE ERSTE österreichische Spar-Casse ... - ERSTE Stiftung

CZECH REPUBLIC
General
Czech tax implications largely depend on whether the Notes qualify as securities. Certain
types of Notes (e.g. certificates and warrants) are not explicitly defined by Czech law.
However, according to a statement published by the Czech National Bank (Czech financial
market regulator), the term "securities" also involves securities that are not specified in the
Czech Capital Markets Act – provided that they meet the general conditions for securities as
indicated in the Czech National Bank’s official statement of 10 September 2007 regarding the
issue of securities that are not provided for by Czech law, published in the Czech National
Bank’s Bulletin.
The information below is based on the assumption that the Notes fulfill all conditions for the
treatment as securities under Czech law. For Czech taxation purposes, proceeds from
specific Notes will be treated either as interest income or capital gains, which may result in
differences in taxation. Prospective investors should verify, among others, the nature of the
Notes and the type of income for each type of the Notes.
Residents
Capital gains
Under the double taxation treaty between Austria and the Czech Republic capital gains from
the sale of the Notes by a tax resident of the Czech Republic are taxable in the Czech
Republic.
Individual investors
Capital gains from the sale of the Notes are exempt from Czech personal income tax if an
individual has held the Notes as a non-business asset for an uninterrupted period of more
than six months. This time limit only applies to non-shareholders and shareholders of the
Issuer who hold a stake of less than 5% in the issuer of the Notes. In all other cases, the
individual must hold the Notes for an uninterrupted period of more than five years for the
personal income tax exemption to be applicable. Either way, the exemption only applies if the
Notes have not been included in the individual’s business assets at any point in time prior to
their sale.
If capital gains from the sale of the Notes held by individuals as a non-business asset are not
tax-exempt, they are subject to personal income tax at a flat rate of 15%, the tax base being
calculated as the income from the sale of the Notes reduced by the purchase price of the
Notes and costs related to their acquisition. A loss from the sale of the Notes may be offset
against gains from the sale of the Notes or other securities in the same fiscal period.
In the case of individuals holding the Notes as a business asset the capital gain from the sale
of the Notes is included in their general income tax base and taxed at a flat rate of 15%. A
loss from the sale of the Notes may be offset against their overall taxable income (other than
employment income) in the current fiscal period. Excess tax losses generated in the current
fiscal year may be carried forward for five fiscal periods.
Corporations
Capital gains from the sale of the Notes held by corporations are to be included in their
general income tax base and taxed at a flat rate of 19%. A loss from the sale of the Notes
may be offset against profits in the current fiscal period or may be carried forward for five
fiscal periods.
Interest
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