Czech Republic

To see the determinations and rating of all published reports click here.

Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Companies incorporated outside of the Czech Republic but having their place of effective management (and thus tax residency) therein are subject to clear requirements to maintain identity information concerning their owners. However, this information may not be available in limited cases where the ownership represents less than 20% of the voting rights in the company.  The Czech Republic should ensure that ownership and identity information are available in all cases for foreign companies having a sufficient nexus with the Czech Republic. 
Czech legislation does not provide for sanctions in all cases for public limited liability companies and cooperatives that fail to maintain ownership information.  The Czech Republic should introduce appropriate enforcement measures to address the risk of public limited liability companies and cooperatives not complying with the requirement to maintain a register of their shareholders and members. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  As of January 1, 2014, bearer shares must be immobilized, or book-entered. Bearer shares that have not been immobilized prior to 1 January 2014 were transformed automatically to certified registered shares with effect from that same date. Shareholders involved lost all rights attached to these bearer shares for the period that these shares were not immobilized, dematerialised or repealed. However, the transitional provisions do not fully ensure that information is available in practice on all holders of bearer shares in all cases.  It is recommended that the Czech Republic monitors the practical implementation including the enforcement of the recently introduced requirement regarding bearer shares to ensure that all shareholders submit their bearer shares to the company to be furnished with the necessary changes and shareholders information is available in all cases.  
As of January 1, 2014, bearer shares must be immobilized, or book-entered. Bearer shares that have not been immobilized prior to 1 January 2014 were transformed automatically to certified registered shares with effect from that same date. Shareholders involved lost all rights attached to these bearer shares for the period that these shares were not immobilized, dematerialised or repealed. However, the transitional provisions do not fully ensure that information is available in practice on all holders of bearer shares in all cases.  It is recommended that the Czech Republic monitors the practical implementation including the enforcement of the recently introduced requirement regarding bearer shares to ensure that all shareholders submit their bearer shares to the company to be furnished with the necessary changes and shareholders information is available in all cases.  
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.   Although opening of bearer passbooks was prohibited in 2002, some pre-existing passbooks are still in existence and identity information on their holders will not be available unless a withdrawal takes place.  The Czech Republic should strengthen measures so that information on the holders of bearer passbooks is available to its competent authority. 
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The privileges attaching to certain information held by legal advisors and tax advisors are more extensive than prescribed by the standard, and could impede effective exchange of information in a given case.  The Czech Republic should ensure that domestic provisions on professional privileges allow exchange of information in line with the standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  The Czech Republic requires that the prior consent of its judicial authorities be obtained by the requesting jurisdiction under mutual legal assistance arrangements before information exchanged under a tax information exchange agreement (DTC, TIEA or the Multilateral Convention) may be used as evidence in criminal tax proceedings in the requesting jurisdiction.   The Czech Republic should monitor that its procedures to allow the use of information as evidence in criminal tax cases does not exceed the limitations on exchange of information as provided under the international standard. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     The Czech Republic should continue to develop its EOI network with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The Czech Republic’s tax treaties do not define the term “professional secret” and the scope of the term “professional secret” under its domestic laws is wide and goes beyond the international standard.  It is recommended that the Czech Republic restricts the scope of the protection under the term “professional secret” in its domestic laws so as to be in line with the standard for the purpose of agreements for exchange of information. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Compliant.  In a number of cases, the Czech Republic has not provided status updates within the 90 day period.  The Czech Republic should provide status updates to its EOI partners within 90 days where relevant. 

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.