Dividendy
Dividends and Taxes in the Czech Republic: A Practical Overview
Key takeaways
- Dividends are taxed in the Czech Republic at 15% — the time test does not apply to them, unlike capital gains.
- Distributing ETFs pay out a dividend that is taxable income in the year of payment.
- Accumulating ETFs do not pay dividends — no annual tax obligation on dividends arises.
- Record every dividend payment: date, amount, and source for the tax return.
Dividends from stocks and distributing ETFs are taxed in the Czech Republic at 15% — regardless of how long they have been held, because the time test does not apply to dividends.
Basic rules of dividend taxation
Unlike selling securities (where under certain conditions there is an exemption after 3 years of holding), dividends are always taxable. The rules are:
- Tax rate: 15%
- Time test: does not apply to dividends
- You report the dividend in the tax return as income from capital assets
- Withholding tax deducted by a foreign broker or issuer may be credited, but this depends on the double-taxation treaty
Distributing vs. accumulating ETFs and taxes
Distributing ETFs send the dividend directly to your account. This payment is income that you must declare in the tax return for that year. Even reinvestment does not avoid it — DRIP does not eliminate the tax obligation.
Accumulating ETFs reinvest dividends internally and never pay them out. This means that no annual tax obligation on dividends arises. You pay tax only when you sell units, which is treated as a capital gain where the time test may apply. The differences are described in detail in the article accumulating vs. distributing ETFs.
What to record and how
For each dividend payment, note: the payment date, the gross amount in the foreign currency, the conversion to CZK using the CNB exchange rate on the payment date, and any withholding tax deducted abroad. Brokers usually issue a statement, but not always in a format suitable for Czech returns — keeping your own records is safer.
Withholding tax from abroad
US stocks and ETFs with Irish domicile are subject to withholding tax when a dividend is paid into Ireland/Europe. For Irish-domiciled funds it is standardly 15% from US stocks. Why Irish domicile matters is explained in the article why UCITS ETF and Irish domicile.
FAQ
What percentage are dividends taxed at in the Czech Republic?
The rate is 15%. The time test that applies to selling shares does not apply to dividends — they are always taxed, regardless of how long you have held them. This is not tax advice.
Do I have to declare a reinvested dividend for tax purposes?
Yes. If a distributing ETF pays a dividend and you immediately reinvest it (DRIP), the tax obligation still arises in the year of payment. Reinvestment does not eliminate the tax.
Why is an accumulating ETF more advantageous from a tax perspective?
An accumulating ETF never pays a dividend — no annual tax obligation on dividends arises. You pay tax only when you sell units, where the time test may apply under certain conditions. This is not tax advice.
Where can I find details on ETF taxation?
A detailed overview including withholding taxes, the time test, and specific procedures can be found in the article on taxes on ETFs in the Czech Republic.