Czech Republic: Amendment to investment companies and funds law passes Parliament

The Chamber of Deputies of the Czech Parliament has passed an amendment to the Investment Companies and Investment Funds (ICIF) Act that includes a technical amendment to the Income Tax Act and introduces several practical adjustments concerning sub-funds.

The amendment also changes some parts of the consolidation package. Read TaxNewsFlash

Overview of key changes

Corporate income tax payer

Since under the ICIF Act it will now be possible to create sub-funds also within a limited partnership on investment certificates as well as within the newly introduced legal form of a joint stock company with fixed share capital (SICAF), the corporate income taxpayer definition would be amended to generally be any sub-fund of an investment fund. 

Basic investment fund

In this context, a similar change is being made to the definition of a “basic investment fund” (i.e., a fund taxed at a lower 5% income tax rate). Subject to meeting a 90% asset value test, a sub-fund would also be a basic investment fund, regardless of the legal form of the investment fund.

Other areas

As taxpayers without a legal personality, sub-funds will now also be treated as depreciators of the tangible assets they comprise. Until now, this possibility was not explicitly mentioned in the law.

The amendment also extends the application scope of provisions that have so far applied only to SICAVs to all sub-funds, or only to SICAF sub-funds when the provision in question only applies to shares.

The provisions of the Income Tax Act applicable to a limited partnership and the limited partner's interest would apply to the sub-funds of a limited partnership on investment certificates.

Effective date

The effective date of the amendment to the ICIF Act as a whole has been proposed for 1 July 2024, but transitional provisions would propose different effective dates for the income tax changes.

Read an April 2024 report prepared by the KPMG member firm in the Czech Republic