The significance of the location of trust fund accounts and assets is specified in the International Private Law Act. Specifically, the trust fund is primarily governed by the law of the Czech Republic. Continue reading “Location of fund assets and accounts”
Quotes
Testamentary trust fund
A testamentary trust fund can be established with a provision in the event of death (will).
By establishing conditions for payment, the founder can determine the purpose or otherwise control pay out to heirs, even after his/her death and prevent, for example, the misuse of assets.
The founder is thus assured his/her estate will be handled in accordance with his/her will, and can ensure the effective inter-generational transfer of his/her assets through a testamentary fund.
Security trust fund
The founder of the trust fund can secure him/herself and his/her immediate family in the event of injury or death through the fund.
Such a trust fund can then be used, for example, to pay benefits on retirement, while studying, during injury or inability to work and so on.
Why should I establish a trust fund?
The establishment of a trust fund can be justified by various needs and interests; first and foremost, the establishment of a trust fund is appropriate if you are interested in protecting your assets for future generations, from execution or the enforcement of judgments. The establishment of trust funds has a long tradition abroad, particularly in Anglo-American countries, and is very common. Continue reading “Why should I establish a trust fund?”
Tax audit
Tax auditing obligations will apply to trust funds based on the same rules as those for natural persons and legal entities based in the Czech Republic.
Audits will be carried out by auditors with a license valid in the Czech Republic.
Value added tax
The trust fund is regarded as a legal entity for the purposes of the VAT Act.
Real estate tax
The payer of real estate tax on real estate property in a trust fund is the trust fund itself. Real estate tax only applies to real estate property in the territory of the Czech Republic.
Real estate transfer tax
Obtaining ownership of real estate property also includes, for the purposes of real estate transfer taxes, the dedication or provision of real estate property to a trust fund. The dedication of real estate property is a subject of the real estate transfer tax only if it is made for consideration.
The transfer of real estate for consideration is not exempted from the real estate acquisition tax and is therefore subject to the same tax as other real estate transfers. The transfer of real estate is considered to be made for consideration even in case of non-monetary performance provided in return for the transfer of the real estate.
Only the transfers of real estates situated in the Czech republic are subject to the real estate transfer tax. The tax rate for the real estate transfer tax is currently 4 % of the value of the transferred property.
In case the real estate is transferred by the trustee from the trust fund, the trust fund is the taxpayer, unless the contracting parties stipulate otherwise. Should the trust fund become the taxpayer, the buyer becomes a guarantor.
If the real estate is transferred to the trust fund, the seller is the taxpayer, unless the contracting parties stipulate otherwise. Should the seller become the taxpayer, the trust fund becomes a guarantor.
Beneficiary income tax
Profit. Payment from trust fund profits is income from capital assets and has a separate tax base for taxation at a special rate of 15%. Payment from profits is not defined by legislation. However, it can be assumed that this is the payment of profits generated by assets in the trust fund (e.g. income from the lease of real estate in the trust fund). Continue reading “Beneficiary income tax”
Trust fund income tax
Trust funds are payers of corporate income tax. The subject of taxes does not include the trust fund’s income from dedicated property to the trust fund or from property to increase trust fund assets via a contract or last will. For the purpose of the Income Tax Act, it is assumed that a trust fund established under Czech law has its registered office in the Czech Republic and is thus a tax resident of the Czech Republic. Tax residents of the Czech Republic have tax obligations which apply both to income from sources in the Czech Republic, as well as from sources abroad.