In order to benefit from Double Taxation Treaty (DTT) rates in the Czech Republic in 2014 a new Certificate of Tax Residency valid for 2014 or issued in 2014 by the tax authority in the investor’s country of residence has to be provided by the non-resident investors in Czech securities to the sub-custodian.
The CoTR must be issued in 2014 and valid for the whole calendar year of the issuance or it can be issued earlier than 2014 in which case the CoTR must indicate its validity for the year 2014. Please note that CoTR needs to be an original. No Apostille or Notarization is needed on the COTR.
Please be kindly reminded to provide CoTR valid for 2014 as soon as possible - it is highly recommended to provide such documents in time to ensure correct taxation of income payments according to the appropriate DTT tax rates. In case the non-resident client fails to provide the above mentioned document the entitled income will be taxed according to the non-treaty regime, standard WHT rate (15%) will be applied (or the planned 35% rate could be potentially applied).
Please also note that if not provided yet then DBO has to be provided as well to be able to apply DTT rates. The previously provided DBOs remain valid (template with no time expiration) unless revoked.
Impact on investors: Certificates of Tax Residency need to be refreshed for the year 2014 (and if not provided yet then also the Declaration of Beneficial Ownership) to be used for DTT tax rates application in the Czech market.