Daně a legislativa ČR
Bond and Interest Taxes for Investors in the Czech Republic
Key takeaways
- Interest from Czech bonds and savings accounts is usually taxed by withholding tax at 15% directly by the bank or issuer.
- Foreign bonds: interest is reported on the tax return as foreign income and taxed at 15%.
- Gains from selling a bond (capital gain) are subject to the same rules as selling equities — including the time test.
- Bonds in a portfolio are common for more conservative investors — their tax treatment differs from equities and ETFs.
- This is not tax advice — verify the current rules with an adviser.
Bonds generate two types of return: interest (coupons) and any gain from a sale. Each type has a different tax treatment and it is important to distinguish between them.
Interest from Czech Bonds and Savings Accounts
If you invest in Czech bonds or keep money in a savings account at a Czech bank, interest is usually taxed at 15% withholding tax directly by the issuer or bank. As the recipient you receive the interest already net of tax and need not report anything further on your return. This is the simplest situation.
Interest from Foreign Bonds
If you buy bonds through a foreign broker or they are issued abroad, the situation is more complex:
- Interest may not be automatically subject to withholding tax.
- It must be reported on the tax return as foreign income.
- Taxed at 15% on the tax base (gross interest converted to CZK).
- Foreign withholding tax may be credited under the applicable double-taxation treaty.
Gain from Selling a Bond
If you buy a bond and sell it at a gain (the price has risen), the capital gain is taxed the same as selling equities. The time test (3 years) or the value test (proceeds from securities sales ≤ CZK 100,000 per year) therefore applies. If you meet one of the tests, the gain is exempt. Details on the tests are in ETF taxes in the Czech Republic.
Bonds in the Context of a Portfolio
Bonds serve to diversify and reduce portfolio volatility — especially for investors closer to the end of their investment horizon. How to include them in a portfolio is described in the guide how to build your first portfolio. From a tax perspective they are less efficient for Czech investors than accumulating equity ETFs, because interest cannot be exempted by the time test.
This article is not tax advice. Tax rules may change — verify the current legislation or consult a tax adviser. See also ETF taxes in the Czech Republic.
FAQ
Do I need to report interest from a Czech savings account on my tax return?
Usually not — the bank withholds 15% tax on your behalf and you receive interest already net of tax. You do not normally include such income on your return. For foreign accounts or bonds the situation is different — you report the interest yourself.
Does the time test apply to bonds?
Yes — a gain from selling a bond (capital gain) is subject to the time test in the same way as selling equities or ETFs. If you meet the three-year holding period (and proceeds do not exceed the limit), the gain is exempt. The time test does not apply to interest (coupons).
How are bond ETFs taxed?
It depends on the type: a distributing bond ETF pays out returns as distributions taxed at 15%. An accumulating bond ETF is taxed only on the gain when you sell your units, and the time test applies. A detailed comparison is in the article on accumulating vs. distributing ETFs.