Get free access to
Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.
Check out our Newsroom to see what is included!
We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.
Unable to subscribe? Try this page.
Withholding tax on interest in the Czech Republic applies when a local company pays interest to a non-resident. The local rules set the standard and maximum tax rates, define when exemptions can apply (especially for EU companies) and outline any reporting obligations that must be followed.
If your company receives interest from the Czech Republic, it’s important to understand how these rules work to avoid mistakes, extra costs, or problems with compliance.
In this overview, we explain the main rules you need to know and highlight the key points for non-resident companies.
Withholding tax on interest in the Czech Republic can create challenges for non-resident companies receiving interest payments from Czech sources. Whether you’re financing a local subsidiary or structuring investments, understanding the local rules is essential to avoid unexpected tax costs or compliance issues.
This topic is particularly relevant for:
Foreign parent companies and holding structures providing loans to Czech subsidiaries
Financial institutions earning interest from Czech-based borrowers
Private equity and investment firms involved in shareholder or acquisition financing
Real estate and infrastructure investors receiving interest from Czech project companies
If your business falls into any of these categories, it’s worth ensuring that your approach to withholding tax in the Czech Republic is accurate, efficient, and well-documented.
On the taxation of interests paid to tax non-residents
On the taxation of interests paid to tax non-residents
Applicable on interest paid to foreign entity residing in jurisdiction with which double tax treaty was not concluded and to foreign entities residing in jurisdiction considered non-cooperative for tax purposes.
Fulfilling the exemption rules defined by the EU Interest & Royalty Directive
In addition to the conditions imposed by the EU Interest & Royalty Directive, the company receiving the interest must be granted a decision on withholding tax exemption by the Czech tax office.
Notification on income paid abroad and tax withheld and remitted must be filed with the tax authority within set deadlines. If the exemption from withholding tax applies, no reporting obligation arises in respect of interest payments of less than CZK 300,000 per calendar month to a single creditor.
For non-resident companies working with Czech entities, withholding tax on interest in the Czech Republic is more than a simple percentage. The rules can be affected by the size of the transaction, the country of the recipient, and whether certain exemptions apply.
Without the right knowledge, businesses risk paying too much tax, missing reporting duties or facing penalties. Understanding the Czech rules helps you stay compliant, reduce tax costs and manage cross-border financing more effectively.
We asked Barbora Stejskalová, our Tax Partner in the Czech Republic, about the most common mistakes companies make when dealing with withholding tax on interest in the Czech Republic, from an expert point of view.
“When dealing with withholding tax on interest payments, clients check the relevant legislation to determine whether and at what percentage the withholding tax applies,” explains Barbora. “If withholding tax does apply, they are generally aware that they need to complete the associated reporting duties and withhold and remit the tax to the tax authorities. However, an issue often arises when the clients identify that the interest payment is not subject to withholding tax. In such a case they are often relieved that no further steps must be dealt with but forget that reporting obligation towards the tax office applies even in this situation. We would therefore remind the clients to double-check the relevant implications as neglecting related duties could lead to unnecessary and unwanted costs.“
Simona Stanislavová, our Senior Tax Consultant in the Czech Republic, further explained what happens when withholding on interest is withheld in the Czech Republic: “It is important to note that when withholding tax is applied on cross border interest payment made by the Czech borrower the tax withheld by him does not represent an unwanted cost. If the lender obtains a certificate from the Czech tax authority confirming that tax was withheld in the Czech Republic, he may apply for exemption from double taxation in his home country tax return. We would thus encourage the foreign lenders to actively seek such confirmation.”
At Accace Czech Republic, we help businesses handle withholding tax and other cross-border tax issues with confidence. Whether you’re dealing with local compliance or planning international financing, our team is here to support you.
Our services include:
With years of experience and a client-first approach, our team ensures your company stays tax-efficient, compliant and one step ahead of regulatory changes.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
