1. Legal regulation Real estate tax is regulated by the Act No. 338/1992 Coll.

, on Real Estate Tax, as subsequently amended (hereinafter referred to as Act). Formally, the real estate tax is divided into two kinds of taxes land tax and buildings tax. Should a double taxation treaty contain a provision divergent from the regulation introduced by the Act, its provisions take precedence over the Act. For list of double taxation treaties binding the Czech Republic in the field of taxation of real estates please see Double Taxation Treaties. 2. Taxable subject The plots of land registered in the real estate cadastre and located in the Czech Republic are subject to the land tax. The buildings and structures built up in compliance with the construction (building) law and located in the Czech Republic are subject to the buildings tax. Flats and non-residential premises are subject to the buildings tax provided that registered in the real estate cadastre. Certain types of plots of land and buildings / structures, in particular the following ones, are not subject to the both land and buildings tax (for complete list please see Sec. 2 (2) and Sec. 7 (2) of the Act): The part of a plot of land which is built-up with a building; Certain kinds of woodlands; Water-covered areas not used for commercial fish-farming; Buildings which include flats and/or non-residential premises subject to the real estate tax; Structures for public transport; Dams and water regulatory structures; Structures for energy distribution; Sewage works. 3. Tax Exemptions The Act stipulates a broad list of tax exemptions. Generally, the following plots of land and buildings /structures are tax exempt (for the complete list of tax exemptions see Sec. 4 and Sec. 9 of the Act): State-owned plots of land and buildings / structures provided that not used for business purposes; Municipally-owned plots of land and buildings / structures provided that located in the cadastral area of the municipality; Buildings and structures serving for / owned by schools, churches, museums, certain non-profit organizations etc., including plots of land necessary for the operation and functioning of such buildings / structures; Agricultural plots of land provided that tax exemption is stipulated by a decree issued by the municipality in which area the plots of land are located. The most tax exemptions must be claimed within the real estate tax return. 4. Tax Base Real estate tax (land tax and buildings tax) base is stipulated as: The value of arable land, hop-fields, vineyards, gardens, orchards and/or permanent grass growth determined as a multiple of the actual area of the plot of land in m2 and the average price per m2 of the land, as periodically stipulated in a decree of the Ministry of Agriculture of the Czech Republic; The value of commercial forests and ponds used for fish-farming stipulated based on price regulations valid on 1 January of the taxable period (calendar year), or stipulated as CZK 3.80 per m2 of the forest / pond; Area of the plot of land in m2 in the case of the rest kinds of plots of land Built-up area or floor area in m2 in the case of buildings / structures. 5. Tax rate The land tax rates are as follows:

 0.75% in the case of arable land, hop-fields, vineyards, gardens and orchards; 0.25% in the case of permanent grass growth, commercial forests and ponds used for fish-farming; CZK 1.00 per m2 in the case of building lands; building land means land which has not yet been built up but on which a building / structure should be built based on an already issued building permit or similar decision / legal act provided that this building / structure will be subject to the real estate tax after its finishing; CZK 0.10 per m2 in the case of built-up areas, courtyards and other plots of land not mentioned above. The buildings tax rates are as follows: CZK 1.00 per m2 of the built-up / floor area in the case of buildings / structures used for agricultural production, forestry or water management; CZK 5.00 per m2 of the built-up / floor area in the case of buildings / structures used for industrial production, civil engineering, transport, power generation or other agricultural production; CZK 10.00 per m2 of the built-up / floor area in the case of other buildings / structures used for business activity (not mentioned above); CZK 1.00 per m2 of the built-up area in the case of residential buildings and per m2 of the floor area in the case of flats and separate non-residential premises not used for business activity; CZK 3.00 per m2 of the built-up area in the case of houses / structures used for individual recreation purposes; CZK 4.00 per m2 of the built-up / floor area in the case of garages constructed separately from residential buildings and/or in the case of non-residential premises used as garages; CZK 1.00 per m2 of the built-up area (exceeding 16 m2) in the case of structures which provide facilities for residential buildings, or are complementary to houses / structures used for individual recreation purposes. The buildings tax rates listed above shall be increased by CZK 0.75 per each additional above-ground floor if the area of such floor exceeds 2/3 of the built-up area of the building / structure. The land tax rates and buildings tax rates listed above are further multiplied by coefficients which are dependent on the number of inhabitants of particular municipality in which area the particular plot of land / building / structure is located. The coefficients are as follows: 1.0 in municipalities having up to and including 1,000 inhabitants; 1.4 in municipalities having from 1,001 to 6,000 inhabitants; 1.6 in municipalities having from 6,001 to 10,000 inhabitants; 2.0 in municipalities having from 10,001 to 25,000 inhabitants; 2.5 in municipalities having from 25,001 to 50,000 inhabitants; 3.5 in municipalities having from 50,001 inhabitants and in Frantikovy Lzn, Luhaovice, Marinsk Lzn and Podbrady (all these towns are famous Czech spa resorts); 4.5 in Prague. In addition, each municipality may issue a decree based on which: The coefficients listed above are either increased by one category or decreased by one to three categories; Prague may increase the coefficient maximally to 5.0; or It determines so called local coefficient equal to 2, 3, 4 or 5 which would be applicable to all plots of land / buildings / structures of one category (e.g., gardens or non-residential premises used for business activity) located in the territory of the municipality. Further adjustments of the buildings tax rates are stipulated in Sec. 11 (2) to Sec. 11 (6) of the Act. 6. Taxpayer The owner of the plot of land / building / structure as on the first day of the particular calendar year is generally the taxpayer. However, in certain cases the taxpayer is the lessee or factual user of the particular plot of land / building / structure (for the list of these exemptions please see Sec. 3 and Sec. 8 of the Act). 7. Tax Return The real estate tax return must be filed with the competent tax authority until 31 January of the particular calendar year (taxable period). The tax return shall not be filed if the taxpayer filed it in any of the preceding taxable periods and no facts decisive for the tax assessment occurred during the previous taxable period. Should such

facts occur, the taxpayer is obliged to file either an ordinary tax return or a partial tax return which reflects only these facts / changes. Changes of the tax rates and/or coefficients do not result to the obligation to file new tax return. 8. Payment of the Tax Real estate tax must be paid to full extent until 31 May of the particular calendar year / taxable period which is the tax paid for, provided that the amount of the tax liability of the taxpayer does not exceed CZK 5,000. Should the tax liability be higher than CZK 5,000, it is payable in two installments. The first installment must be paid until 31 May (31 August in the case of taxpayers carrying on their business activity in the agricultural production and/or fish farming) and the second one until 30 November of the particular calendar year / taxable period which is the tax paid for. The amount of the tax liability for each particular taxable period is announced to the taxpayer by the competent tax authority. 9. Statute of Limitation Real estate tax must not be assessed or additionally assessed after lapse of 3 years from the end of the relevant taxable period (calendar year) unless the tax authority makes an action aimed to review the taxpayers tax liability and the taxpayer is informed of this action before the end of this time-period. In such a case new 3-years period begins to run from the end of the year in which the action was made; however, the tax must not be assessed or additionally assessed after lapse of 10 years following the relevant taxable period (calendar year).

General Information about Property Taxes in the Czech Republic Property tax returns (da z nemovitosti) are due January 31st. The Czech Republic doesn't calculate property according to the market value, but rather according to the size of the property. Consequently, property taxes here are very inexpensive in comparison to other countries. The base property tax rates are different depending on the purpose of the property. You must file a property tax return the first year, and then, once your property tax rates have been established and approved by the financial authorities, you just need to pay the same tax amount each year on or before May 31st if less than 5,000 CZK in taxes are due. Property taxes are not paid on new apartments until the building has been inspected and approved by the local building inspection authorities (Stavebn ad) for construction code compliance. The inspectors will issue an inspection approval (Kolaudan Rozhodnut) verifying this to the tax office. After this, the owner of the property whom is listed in the Czech Republic's Property Registry (Katastraln ad) is the party responsible to pay the property taxes. If an apartment has been remodelled, then another inspection must be conducted. Consequently, new rates are established and another return must be prepared by January 31st the following year. The property return includes separate estimates for building and land. The base rates for building and land taxes are set by the law, but vary by city. The base rates are 1 CZK per square meter, 4 CZK per square meter for garages, and 0.10 CZK per square meter of land, multiplied by a

coefficient of 1.20, then multiplied by the city rate, which is determined by the city's population size. In Prague, the local rate is 5.0. Therefore, as an example we can preliminarily calculate the property tax due for an 85 square meter apartment in Prague without a garage and land: (85 square meters x 1.2) x 5.0 = 510 CZK property tax due for one year However, there are many exceptions and rates can also vary by districts within the city. As you can imagine, the process for understanding these exceptions and knowing the local authority's rates, along with re-calculating the final tax rate is daunting. It is recommended that you get an experienced Czech advisor to accurately calculate the tax rate which must be paid each year, and to prepare your tax return

Tax Payments Process Property taxes are paid to the tax office in the region where the property is located to a bank account specially set up for this purpose. Taxes can be paid by bank transfer, or in cash at the tax office's cash desk (pokladna). All other taxes are paid to the tax office (Finann ad) where your company or your EU card (a Czech residency permit for European Union citizens) is legally registered. For each tax due, whether it's corporate tax, road tax or value added tax (VAT), there's a separate bank account, with its own number, into which your monies must be paid. The payments your company makes will be identified by a number (variabiln symbol or VS) matching your company's business license number (IO). EU card holders must inform the tax office of the tax ID number that they will be using, which is often their passport number. Corporate income tax The standard rate of corporate income tax (CIT) is 24% for 2006 (previously 26%) for resident companies and non-resident companies with a permanent establishment or with a branch in the Czech Republic. A special rate of 5% applies to the taxable profits of investment funds. Capital gains Capital gains realised on the sale of Czech real estate are generally liable to corporate income tax at 24% for 2006 (previously 26%). Where an asset is sold to the lessee on termination of an operational or financial lease, previous rental payments made by the lessee will be tax-deductible for the lessee (subject to certain conditions stipulated in the Czech Income Taxes Act). Capital losses cannot be generated on the sale of land and a tax-deductibility of purchase price is limited to the amount of sale proceeds on the sale. The tax consequences of the sale of shares in a property holding company depend on the legal form of the company and on the sellers status. Non-residents are generally outside the scope of Czech taxation. However, a non-resident selling to a Czech resident falls within the scope of Czech taxation. However where a tax treaty exists any gain may be exempted from Czech taxation. Capital gains realised on disposal of a Czech property company by an intermediate Czech holding company are subject to CIT at 24% for 2006 (previously 26%). However, losses realised by an intermediate Czech holding company on the disposal of shares in a joint stock company are not tax deductible except in limited circumstances on the sale of shares in a joint stock company. Losses realised on the sale of shares in a Czech limited liability company or on the sale of a share in a limited partnership are not tax deductible. Property tax

Property tax of 0.25% to 0.75% is charged on plots of land registered in the Czech Real Estate Cadastre. Property tax on land for which planning permission has been granted is charged at CZK 1/m2. Building tax is calculated at CZK 0.75/m2 to 10/m2 (depending on the location of the building and the use to which it is put) according to the registered ground area of the building. Property tax is reportable to the tax authorities by 31 January each year on a calendar year basis and is generally payable in advance via quarterly payments. Property transfer tax Property transfer tax is charged at 3% on the higher of the agreed purchase price or the officially assessed value of the property being transferred. However, an exemption may be available in certain circumstances. The seller usually pays the tax, while the purchaser acts as guarantor. VAT The majority of goods and services are chargeable to VAT at the standard rate of 19%. A reduced rate of 5% applies to the sale of residential property within 3 years of acquisition or approval for residential use, the supply of construction services related to residential housing, and supply of heating and air conditioning. Supply of goods to another EU Member State may be zero rated. However this is not usually applicable to the supply of real estate. Leasing of real estate is VAT exempt unless the lessor opts to apply VAT, as is the transfer of real estate more than 3 years from acquisition or approval for use. VAT must be charged by a taxable entity (incorporated in or having a place of business or fixed establishment in the Czech Republic) if (i) its turnover in the previous 12 calendar months exceeded CZK 1 million, or (ii) it provides certain supplies listed in the Czech VAT Act.

The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice. This article is from 'European Property', published annually by Freeman Business Information plc, www.efreeman.co.uk.

Slovakia - real estate tax guide

Corporate income tax Corporation income tax (CIT) is charged in the Slovak Republic at the standard rate of 19% and is payable by a Slovak incorporated company holding property in the Slovak Republic, or a non-resident company trading in the Slovak Republic through a branch. The tax is reportable to the tax authorities on an accounting year basis. A non-Slovak resident company holding Slovak property will be subject to income tax at the basic rate of 19%. Withholding tax at 19% is applied to rental payments made to a non-resident (rate can be decreased by a double tax treaty). Under certain Slovakian double tax treaties, rental profits realised by a non-resident entity may be classified as either royalties or business profits. Royalties are subject to Slovakian CIT at 19%, whereas business profits are not taxable in the Slovak Republic unless realised via a Slovak PE. If a non-resident files a Slovak tax return, (either voluntarily or due to the presence of a Slovak PE), and Withholding tax paid can be offset against the CIT due. Any excess tax paid is refundable. Capital gains Capital gains realised on the sale of real estate or shares in a real estate company by a Slovak incorporated company or non-resident company carrying on a trade in the Slovak Republic through a branch are subject to corporation tax at the standard rate of 19%. Non-resident companies disposing of Slovak property are generally subject to corporate tax on any gains realised on the sale of real estate or shares in a real estate company if the proceeds are received from a Slovak resident entity. Property tax There is no tax on the value of real estate held in the Slovak Republic by wither resident or non-resident entities. Property transfer taxes Real estate transfer tax was abolished on 1 January 2005. Therefore, the purchase of Slovak real estate property is not subject to any property transfer tax in the Slovak Republic. VAT VAT registration is compulsory for resident and non-resident companies trading in the Slovak Republic through a branch. VAT registration is necessary for entities whose taxable supplies in the Slovak Republic exceed SKK 1.5 million for a period of 12 months (limit applicable from 1 May 2004). Foreign business entities commencing a business in the Slovak Republic have the obligation to register immediately. VAT is charged at the standard rate of 19% applicable in the Slovak Republic. Certain exemptions exist. However, it is possible to waive the exemption in certain circumstances (e.g. on supply of a building including the connected land after 5 years from the issuance of the first occupancy permit decision, and on some rental supplies of real estate).

The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice. This article is from 'European Property', published annually by Freeman Business Information plc, www.efreeman.co.uk.