Global Tax Report - December 2011

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In This Issue:

Czech Republic — Investing in the Czech Republic; France — Inbound Investments Made by Non-Resident Investors; Germany — European Court of Justice: German WHT on Dividends Paid to EU/EEA Minority; Shareholders Violates Free Movement of Capital; Hungary — Brief Update on the Hungarian Tax Climate; Japan — Cross border Merger Taxation in Japan; Poland — Investing in Poland; United States New Proposed Treasury Regulations Clarify the Scope of the Exemption from US Taxation of Foreign Sovereigns; United States — Common Transaction Structures Utilized by Non-US Investors in US Real Property; and, United Kingdom — Open for Business.

Excerpt from Czech Republic — Investing in the Czech Republic

Historically, foreign investors have often used intermediate holding companies in other countries when investing in the Czech Republic. Foreign holding companies have also been used by Czech resident investors. These holding structures used to be driven by Czech income tax applicable to dividends and capital gains on the sale of shares. However, this is no longer the case.

Holding Companies in the Czech Republic

Presently, the Czech Republic benefits from quite a broad participation exemption regime applicable to both dividends and capital gains. Specifically, the exemption applies with respect to participation in EU-based companies if at least 10 percent of shares are held for at least 12 months (subject to other conditions).

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