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Tax Return Season: How to Prepare Your Documents as an Investor
Key takeaways
- Securities sales that do not meet the time test (less than 3 years) or the value test (below 100,000 CZK) must be declared in a tax return.
- Dividends from foreign ETFs are subject to taxation in the Czech Republic — brokers typically do not withhold this tax automatically.
- You need a trade statement, a dividend statement, exchange rates on the transaction date, and proof of foreign withholding tax.
- Deducting foreign withholding tax prevents double taxation — subject to the applicable treaty.
- This is not tax advice — consult a tax adviser or the tax authority for your specific situation.
Every investor who sold securities or received dividends from abroad in the past year has obligations to the Czech tax authority — and the filing deadline is approaching.
When you must file a tax return
As an individual you must file a return if you had income from securities sales exceeding the value test (aggregate over 100,000 CZK) or not meeting the time test (you held the security for less than 3 years). Foreign dividends are recorded as income from abroad regardless of the amount. Disclaimer: this is not tax advice — always consult a tax adviser or the tax authority directly for your specific situation.
What to prepare: a practical checklist
- Statement of all completed trades — from your broker's platform (usually CSV or PDF).
- Statement of received dividends — with dates and amounts in the original currency.
- Czech National Bank exchange rates — for the date of each trade or dividend (kurzy.cnb.cz).
- Proof of foreign withholding tax — brokers typically deduct it automatically; the document supports a credit under the applicable double-taxation treaty.
- End-of-year balance confirmation — in case of an audit.
How to calculate the tax base on a sale
Tax base = proceeds from sale minus acquisition cost (what you paid for the security, including fees). For the average cost method (FIFO or average), this depends on the broker's methodology. The personal income tax rate is 15% (above a base of 36 times the average wage the rate is 23%). Dividends from abroad are also taxed at 15%, with a possible credit for foreign withholding tax. More on the basics of ETF taxation in the overview article.
When to use the lump-sum expense deduction and when not to
The lump-sum deduction cannot be applied to income from capital assets (dividends). For income from securities sales you use actual acquisition costs. Preparing the documents takes time — but leaving it to the last minute increases the risk of errors.
FAQ
Do I have to pay tax on every ETF sale?
It depends on the holding period and the amount of income. If you held the ETF for more than 3 years (time test) or the total proceeds from securities sales did not exceed 100,000 CZK (value test), no tax obligation arises. For certainty, consult a tax adviser.
How do I find out the amount of foreign withholding tax on dividends?
Your broker shows it in the annual tax statement or trade statement. It is usually labelled "withholding tax". For Irish UCITS ETFs holding US equities it is typically 15%.
What if the broker is based abroad and does not send me a Czech-language tax statement?
You are responsible for correctly reporting income regardless of the document's language. A foreign statement is a fully valid document. If in doubt, ask the broker for details and consult a tax adviser.