Holdingová struktura – odstrašující příběh

We have a sad story for you about a holding company, exit/non-exit, and abuse.

Main outlines of the story:

• An individual (the taxpayer) has a manufacturing company (OpCo).
• The individual sells OpCo to a newly established holding company (HoldCo), which they own—for approximately one billion crowns.
• The purchase price is payable in ten annual installments, i.e., approximately 100 million crowns per year.
• In the following years, OpCo pays approximately 100 million crowns in dividends tax-free to HoldCo, and HoldCo repays the purchase price to the individual.
• The tax authority intervenes and assesses OpCo for withholding tax due to abuse.
• OpCo does not give up and argues, among other things, that it should not have been assessed for corporate withholding tax (HoldCo), but for individual withholding tax (the taxpayer)—thus, the wrong tax was assessed, and it is now time-barred.
• The Supreme Administrative Court disagrees and states that in this situation, the tax authority essentially had a choice: "...In the case currently under consideration, it was essentially up to the tax authority to determine whether to assess for corporate income tax or individual income tax collected by withholding at a special tax rate. Both of these paths would lead to the same result, namely the determination of the tax liability for the payer as the tax remitter, who is obliged to withhold and remit this tax...".

We take away two things from this: when creating a holding structure, it pays to be reasonable, and the tax authority has some flexibility in determining how to eliminate the prohibited tax advantage.

Authors:

Radek Matuštík

Jakub Tměj