This Announcement of the Ministry of Finance was published in the Financial Reporter ("Finaneni zpravodaj") No. 10/1996. The Ministry of Finance announced that Instruction No. D-91 was not influenced by the amendment of the Securities Act.
If mediators, brokers, agents or administrators who do not have ownership rights to the securitiesï yields take part in business transactions on behalf of their clients, the double taxation treaty with the country of brokersï residence cannot be applied. However, these persons will generally provide the person who pays the yield with certification of residence of the real owner of the yield.
However, if the residence of the real owner cannot be determined, then the payments are treated as being made to a non-treaty country i.e. withholding tax will apply at domestic rates.
This interpretation therefore will still cause difficulties in certain situations where nominees are used, particularly in cases such as Eurobond trading on the Euroclear system.
The content of this article is intended to provide a general guide to the subject matter. It is therefore not a substitute for specialist advice.
For further information contact Paul Antrobus or Richard Fletcher, Arthur Andersen Prague, tel +42 2 2440 1300 or enter a text search 'Arthur Andersen' and 'Business Monitor'.
