Czech Republic: As of 1 January 2015, closed-end funds are subject to taxation at a rate of 19%
Effective as of 1 January 2015, an amendment to the Income Tax Act has changed the level of taxation of investment funds, with different rates for different classes of funds. Up until 2013, all investment funds could tax their income at 5% under the law. Now, though, one must differentiate between basic investment funds (Sec. 17b of the Income Tax Act), which may still tax their income at 5%, and other investment funds, which are taxed at the same rate as other corporate income tax payers: 19%. Basic investment funds are (i) funds whose stock is traded in a European regulated market; (ii) investment funds and sub-funds of investment companies with variable capital (i.e., fund property which is separate in terms of accounting and asset structure and which is subject to a separate investment strategy), provided that the company qualifies as a collective investment scheme; (iii) open-ended mutual funds, and (iv) investment funds that invest more than 90% of their asset value into stocks and bonds. Other domestic investment funds and selected foreign investment funds may also make use of the reduced tax rate, subject to the terms set out in the law (which entail certain restrictions regarding the investment targets) (letters (d), (e)). The tax discrimination in the form of the 19% tax rate affects about 76 special-purpose funds which manage altogether more than 50 billion crowns’ worth of assets, all of them being closed funds for qualified investors whose activities may overlap with standard business operations (such as property development projects, photovoltaic power plants, or rental properties that are being made part of the fund capital). That being said, even a fund whose strategy is centered around investments into real property, commodities, and other special investments may pass as a basic investment fund, as long as it is organized in the form of an open-ended mutual fund (i.e., neither the number nor the term of issued share certificates is limited, and the shareholder has a right to sell back their shares). A trust may also qualify as basic investment fund, provided it meets the statutory requirements. The zero tax rate for pension funds has remained untouched.
Source: Amendment No. 267/2014 Coll. to the Income Tax Act Explanatory Memorandum