Taxation of listed investment funds is changing

The original draft amendment proposed by the Senate of the Czech Republic underwent a number of significant changes, especially as a result of amending motions submitted by the budget committee. The amendment introduces new conditions that must be met by investment funds whose shares have been accepted for trading on an EU regulated market to continue to qualify as a basic investment fund and to be taxed at 5%. The rules for other basic investment funds remain unchanged, i.e. for unit funds, investment funds and sub-funds of joint-stock companies with variable capital that invest more than 90% of the value of their assets into statutory investment and financial instruments as well as for comparable foreign investment funds. 
 

Under the new regulations, investments funds listed for trading on an EU regulated market will qualify as basic investment funds only if: 

Shares of related parties are summed up for the purpose of the first test. This condition should be met even if the permitted amount of a share in the registered capital is exceeded over the period shorter than a half of the taxable period. The amendment is yet to be passed by the senate and signed by the president. It therefore cannot be excluded that it will be further amended. The new rules should become effective from 2019.