Czech Republic Double Taxation Treaty Update
In May and June 2011, the Czech Republic’s Minister of Finance signed double taxation treaties with the governments of Hong Kong (SAR) and the Kingdom of Bahrain.
In addition, double taxation treaties with Denmark (replacing the existing one which is nearly thirty years old) and with Poland (replacing the treaty of 1993) are being prepared for signature.
The above-noted treaties are expected to enter into force in 2012 or 2013.
A new treaty with the People’s Republic of China (PRC) has become effective and will apply from January 2012.
The following table shows maximum rates of withholding tax on dividends, interest, and royalties to be withheld at source under the above treaties. For newly-negotiated treaties, please note that there are no transitional provisions, and the application of the old and the new rates shall be governed by local regulations.
The ratification process for amendments to treaties with Belgium and Belarus has been completed on the Czech side, and it is now a question of waiting for the treaties to be ratified by the treaty partners. Both amended treaties are expected to take effect starting 2012.