Financial assistance is possible in the Czech Republic provided certain requirements are satisfied.
The use of subordinate debt is allowed.
Interest on debt used to purchase a share in a subsidiary (participation > 10 %, time period of possession at least 12 consecutive months) is not tax-deductible (exemption possible). Interest on debt used to asset deal is tax deductible (exemption possible).
Interest expense for subordinate debt is tax-deductible (exemption possible).
Thresholds for tax deductibility of net borrowing costs is CZK 80,000,000 (EUR 3,192,338) or 30 % of EBITDA. Net borrowing costs exceeding the higher of the two thresholds are considered tax non-deductible. Financing expenses of credits and loans if the interest rate depends on the borrower's profit, are not tax deductible (in case of such dependence, higher profits mean higher interest).
Squeeze-out option is available for shareholder with a share of more than 90 % on the registered capital. There is also an option for majority shareholders to takeover of assets.
The gain on the sale of shares is taxable income, except the conditions of the participation exemption are met (new strict conditions for natural persons from 2025).
The gain on the sale of ownership interest in a limited liability company is taxable income, except the conditions of the participation exemption are met (new strict conditions for natural persons from 2025).
In the Czech Republic neither the ownership interest in a general partnership nor the ownership interest of the general partner in a limited partnership can be sold. The income from the sale of ownership interest of the limited partner in a limited partnership is taxable income.
Capital gains from the sale of a share in a subsidiary company with EU residency by a parent company are exempt. The minimum holding period is 12 consecutive months and the minimum interest in the subsidiary company is 10 %. Capital gains from the sale of a share in a subsidiary company with non-EU residency are also exempt under conditions stipulated in the Income Tax Act and DTAs.
A business can be sold as a whole. The parts of the business include tangible and intangible fixed assets (CAPEX), current assets, liabilities, and employees as well as all the rights & obligations connected with the business.
Option between two methods:
Goodwill is generally amortised within 60 months for accounting purposes and over 180 months for tax purposes. The valuation difference is amortised over 180 months for accounting, as well as tax purposes.
Merger by acquisition or merger by formation, including cross-border mergers within the EU, takeover of assets by majority shareholders. Demerger, spin-off.
Merger: revaluation of companies being acquired (dissolved) in the merger. The revaluation has no tax effect.
Where a parent company is merged with a wholly owned subsidiary, revaluation is possible but not required by law.
In mergers of companies in common ownership with the same relationship, a revaluation is possible but not required. Valuation during demerger and spin-off has similar conditions.
Selection of two methods:
Amortisation of goodwill is generally spread within 60 months for accounting purposes.
The difference on valuation is written down over a period of 180 months for accounting purposes.
Differences on valuation and goodwill resulting from mergers are not tax deductible.
Contribution in kind made by a shareholder into the equity is possible if the contributed assets are considered to be utilizable for business operations. The value of such a contribution must be set by an expert opinion or valuation.
Differences on valuation and goodwill resulting from the contribution in kind are not tax deductible.
Opening Hours:
Mo-Th: 08:00 – 17:00
Fr: 08:00 – 14:00
Opening Hours:
Mo-Th: 08:00 – 17:00
Fr: 08:00 – 14:00
Opening Hours:
Mo-Th: 08:00 – 17:00
Fr: 08:00 – 14:00
