Open an Investment Fund in Czech Republic
Open an Investment Fund in Czech RepublicUpdated on Friday 10th April 2020
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One of the ways in which foreign investors can set up their business operations in Czech Republic is through an investment fund. The Czech legislation provides many options in this sense, with investment vehicles addressed to various types of investors. The Czech regulations referring to the investment funds set up here have incorporated most of the directives imposed by the European Union (EU), as the country is a member state of the Community. Our team of lawyers in Czech Republic can offer legal assistance for the registration of an investment fund, in accordance with the investment plans of the businessmen.
Investment fund legislation in Czech Republic
Those who want to start a business in Czech Republic through an investment fund should analyse the legislation applicable by the local authorities. According to the Act on Collective Investments, foreign investment companies are allowed to perform investment activities in Czech Republic as long as they are incorporated in one of the member states of the EU. Furthermore, they should provide information on their registered office and should be the owners of a license which allows them to carry their activities; our team of attorneys in Czech Republic can offer more details in this sense.
Types of investment funds in Czech Republic
Although the investment market in Czech Republic is not as developed compared to other European states, in 2014 there were registered more than 1,200 foreign investment funds. As a general rule, the applicable legislation distinguishes between open-ended funds and closed-ended funds, a characteristic which refer to the limitations imposed to for the issuance of shares.
Investors can set up an investment vehicle registered under one of the following legal entities:
• mutual funds;
• trust funds;
• joint stock companies;
• investment company with variable capital;
• limited partnership;
• limited liability company;
• European company.
Requirements for the registration of a Czech investment fund
In order to set up a company registered as an investment fund, the investors will have to provide a minimum capital of EUR 1,25 million. The investment funds have to be approved by the Czech National Bank (CNB), which is the main regulatory body established for this type of vehicles, but only in certain conditions. Still, the managers of the fund, regardless of its type, have to receive an approval from the above mentioned institution and our attorneys in Czech Republic can offer more details on the application requirements.
Information referring to the statute of an investment fund in Czech Republic can be found in the Decree of 24th of July 2013, issued by the CNB, which stipulates what types of information should be provided on the investment fund and on its managers, as well as on the investment strategies carried out under the respective vehicle.
Taxation of an investment fund in Czech Republic
The taxation level of an investment fund set up in Czech Republic differs from the taxation system applicable to commercial companies. Thus, an investment fund which is listed on a stock market situated in the EU, will be taxed in Czech Republic for its income with a rate of 5%. Furthermore, pension funds are fully exempted from paying the tax on income.
Investors interested in receiving more details referring to the registration of an investment fund in this country can address to our Czech law firm.