Inheritance Tax Act
The Parliament passed an amendment to the Inheritance, Gift and Real Estate Transfer Tax Act. According to this, relatives in group I. of this Act - children, parents, grandchildren and grandparents and inheriting spouse - will not pay inheritance tax.
The same proposed amendment with respect to gift tax was not accepted by Parliament.
An amendment to Act No. 21/1992 Coll. (The Banking Act) has been passed recently by Parliament. The bill is currently awaiting approval of the Senate.
The stated objective of this amendment is to increase confidence in the Czech banking system and to approximate banking legislation to EU standards.
The amendment mainly focuses on security of the banking system and powers of the regulatory authority (the Czech National Bank), and measures against shareholders violating applicable rules or destabilising the banking system.
The most important changes brought about by the amendment include:
* Issue of licences
In deciding on the issuance of a banking licence, consideration shall be given by the Czech National Bank to the eligibility of each shareholder holding 10% or more of the voting rights.
* Director's liability
Direct joint and several liability of members of the Board of Directors towards creditors of a bank is introduced in case of breach of their obligations.
* Purchase of bank shares
Special consent of the Czech National Bank will not be required for purchase of shares by a foreign investor and equal rules shall apply to domestic and foreign investors with respect to purchase of shares.
Shareholding limits (10%, 20%, 33% and 50% of the voting rights) are introduced. Acquisitions at these levels require special consent of the Czech National Bank, failure of which may lead to loss of voting rights.
* Share issues
Banks may only issue shares carrying voting rights in book-entry form. Preference shares issued by a bank may never carry a voting right.
* Czech National Bank powers
New measures are available to the Czech National Bank in cases of negative balance sheet ratios or instability of the bank, including forced administration, forced capital increase of the bank, restriction on purchase of stockholdings in entities, suspension of the provision of loans to entities or persons with a special relationship with the bank and a cap on interest rates for deposits.
* Statutory insurance
Statutory insurance on deposits is extended to deposits belonging to legal entities. Also the amount insured will be increased to 90% of deposits, the maximum deposit insured being Kc 400,000.
A proposal for major amendments to the Czech Accounting Act has been prepared by the Ministry of Finance. Currently, the proposal has been submitted for comments to the Chamber of Auditors and other professional bodies and accounting experts.
The main purpose of the amendment is to achieve full compatibility of the Czech accounting law with that of EU, and to emphasise the true and fair view nature of accounting. One of the sources of this amendment is the International Accounting Standards (IAS).
The proposed date of effect is now 1 January 2000 which is later than was initially expected.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information on the above, please contact Mr Richard Fletcher by telephone on +420 2 2440 1300 or E-mail directly to Click Contact Link