The Chamber of Deputies, the lower house of the Czech Parliament, approved the changes to the tax regime as voted for earlier by the Senate. The proposal for withholding tax exemption on dividends paid by Czech corporations to residents of EU,Iceland,NorwayandSwitzerlandwas rejected and thus there will be no changes in withholding taxes from 1 January 2014 as compared to the current regime. At the same time, the holding period for local individual tax residents to avoid Capital Gains Tax will be prolonged from 6 months to 3 years as of 1 January 2014.
Impact on investors: No changes to withholding taxes relevant to foreign investors will take place. Foreign investors are also not subject to capital gains tax, the 3 year holding period will have an impact only on individuals, which are tax residents of the Czech Republic.