The Czech Parliament has approved an amendment to the Investment Companies and Investment Funds (ICIF) Act. This amendment includes a technical amendment to the Income Tax Act and introduces various practical modifications related to sub-funds.
Additionally, the amendment modifies specific provisions within the consolidation package.
The following is the overview of the key changes:
Corporate income tax payer
Under the ICIF Act, creating sub-funds is allowed within a limited partnership on investment certificates and within the newly established legal structure of a joint stock company with fixed share capital (SICAF).
The definition of a corporate income taxpayer will be modified to include any sub-fund of an investment fund.
Basic investment fund
The definition of a “basic investment fund” will be redefined, and a fund will now be incorporated that is subject to a reduced income tax rate of 5%.
A sub-fund can be classified as a basic investment fund provided it meets a 90% asset value benchmark.
Other provisions
- Sub-funds will now be recognised as depreciators of the tangible assets they contain. Previously, the law did not facilitate this stipulation.
- The amendment also extends the application scope of measures previously exclusive to SICAVs to all sub-funds. This amendment is also applicable to SICAF sub-funds, but the provision will only be applicable to shares.
- The regulations of the Income Tax Act relevant to limited partnerships and the interests of limited partners also apply to the sub-funds of a limited partnership related to investment certificates.
The proposed effective date for the amendment to the ICIF Act is set for Monday, 1 July, 2024.
