Useful information for investors: How loans are taxed

A loan represents a contractual relationship generating income in the form of interest. For the purposes of this summary, we assume that receivables arising from the loan are not assignable to third parties and therefore no detailed attention will be given to the tax implications of the assignment of the receivable.
Below we provide information on the taxation of interest income from loans provided to a borrower domiciled in the Czech Republic, structured as follows:

• Income of a Czech tax resident and its taxation in the Czech Republic: individual, legal entity
• Income of a Czech tax non-resident and its taxation in the Czech Republic
• Income of a Slovak tax resident and its taxation in the Slovak Republic: individual, legal entity

CZECH tax resident

Individual
Interest on a loan provided is income subject to tax at a rate of 15% or 23%, depending on the total amount of the tax base. The investor includes it in the partial tax base for income from capital assets. The investor may claim as an expense only the interest paid on amounts used to provide the loan, and only up to the amount of the income. The investor is required to report the income in the tax return for the year in which the interest was actually received.
Income from the loan provided is not subject to public health or social insurance contributions.

Legal entity
Interest from loans is included in the tax base and is subject to tax at a rate of