News Investment funds to pay higher corporate income tax
The amendment to the Income Tax Act No. 174/2018 Coll. introduces a change in the taxation of investment funds. So far, the core investment funds, whose profits are subject to a 5% corporation tax, have included investment fuds with shares admitted to trading on a European regulated market.
The aforementioned amendment has thus narrowed the group of “tax privileged” investment funds by setting additional conditions:
- No corporate income taxpayer has a share of more than 10% in the investment fund capital, while the shares of related parties are considered to be the shares of one party for this purpose
- The investment fund does not carry out any business activity
Any investment fund not meeting the conditions above will be subject to the corporate income tax of 19%. The higher tax rate will now apply to e.g. intra-group investment funds, which have benefited from the lower tax as they were admitted to trading on a European regulated market.
The amendment shall become effective on 1 January 2019. The investment funds with a tax period commenced before the effective date of this amendment shall be taxed at 5% income tax rate.
In case you are directly affected by this change, do not hesitate to contact us and ask for advice.
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