The Czech Republic’s Tax Administration, through Jiří Žežulka, Director of the Audit Section at the General Financial Directorate, has publicly stated that holding structures used for tax optimisation are among the new priorities for tax audits. According to published information, the tax authority has identified approximately 130 groups of companies for which it expects additional tax assessments totalling around CZK 3 billion. In particular, structures utilising dividend exemptions, holding company reorganisations and the associated exemptions relating to the sale price of business shares and shares, or the return of non-monetary contributions made outside the share capital, are coming under increased scrutiny. In all such transactions, the Financial Administration examines their economic rationale and the possible existence of abuse of rights.

A holding structure is, of course, not in itself anything illegitimate. On the contrary, it is a common tool for managing groups of companies, acquisitions, asset protection, financing investments or the generational handover of family businesses. However, the tax authorities have indicated that they will focus on cases where, in their view, the structure was created primarily for the purpose of obtaining a tax advantage, in particular the exemption of dividends or the avoidance of withholding tax.