Navrhovaný limit pro osvobození při prodeji cenných papírů a postupné inkaso

Proposed limit for exemption on sale of securities and gradual instalments

The government has recently unveiled a package of measures to help consolidate public finances, with the austerity package expected to be debated in the Chamber of Deputies for its first reading this week.

One of the proposed measures is the limitation of the exemption for the sale of securities and shares in companies - the exemption of income from the sale of a security/share in a company is to be limited to CZK 40 million if the time test of 3 years or 5 years between acquisition and sale is met.

Many questions arise in this context, but the main one is whether the tax result is affected by the method of collection of the sale price. In other words, whether the CZK 40 million limit is applied per tax year and if the sale price is collected in three equal instalments over three years, the limit is effectively increased to three times. The Bill, combined with the example in the Explanatory Memorandum at page 368, can perhaps be read in this way.

In this context, we can think of three basic possibilities:

• We are reading it wrong - the limit is not effectively increased in case of gradual instalments.
• We read it correctly and it is entirely consistent with the intention of the legislator.
• We read it correctly in the first step, but the legislator assumes that it will approach "artificial" gradual instalments as an abuse of the law (it then remains to be clarified how to determine this artificiality - it strikes us as a tough nut to crack).

So we shall see. 

If you have any questions, please do not hesitate to contact the authors of this article or the EY team members with whom you usually work.

Authors:

Libor Frýzek
Michaela Felcmanová