General tax considerations

Austria, Czech Republic, Poland and Hungary

Where an Austrian resident founder has held the shares in the Austrian resident target company indirectly through an Austrian holding vehicle in the form of a corporate entity as from the incorporation of the target company, any capital gains realized by the holding vehicle will be subject to Austrian corporate income tax of currently 23%. However, any profit distributions made by the holding vehicle to the founder as shareholder (whether or not sourced from the capital gains previously realized) are subject to Austrian withholding tax at a rate of 27.5% to be withheld by the holding vehicle. In case the founder holds the shares in the Austrian target company directly capital gains realized upon the sale of these shares are subject to Austrian withholding tax of 27.5%.

Czech Republic

According to the Income Tax Act, the general corporate income tax rate in the Czech Republic is currently set at 21% for any capital gains realized by the company as a taxpayer for the tax period of one calendar year. However, any profit distributions made by the company to its shareholders are subject to Czech withholding tax at a rate of 15% (in case of individual shareholders who are Czech tax residents) to be withheld by the company (shareholders being the taxpayers of this withholding tax). When legal entities themselves are shareholders, the share of profit may be exempt from tax under certain conditions. If the recipient of the share of profit is a non-resident of the Czech Republic, the withholding tax is often higher, depending on the valid international agreements on the avoidance of double taxation between the Czech Republic and the recipient’s home country.

Starting from 1 January 2025, new tax rules for the sale of shares and stocks by individuals came into force in the Czech Republic. Income over CZK 40 million is taxed at a rate of 15% and 23% respectively (according to the tax law, a part of the tax base is taxed at a lower rate of 15% and a part at a higher rate of 23%). The income limit of CZK 40 million is applied on the basis of a "time test" – if an individual holds a share in a company for a certain minimum period (usually 5 years), income up to this amount is exempt from tax. However, above the said threshold, all additional income is subject to tax.

Poland

As a general rule, where a Polish resident founder has held the shares in the Polish resident target company indirectly through a Polish holding vehicle in the form of a corporate entity as from the incorporation of the target company, any capital gains realized by the holding vehicle will be subject to Polish corporate income tax, at a rate of 19%. However, any profit distributions made by the holding vehicle to the founder as shareholder (whether or not sourced from the capital gains previously realized) are subject to further personal income taxation at 19%. In case the founder holds the shares in the target company directly, capital gains realized upon the sale of these shares are subject to capital gains tax of 19%.

Hungary

Where a Hungarian resident founder holds shares in a Hungarian target company indirectly through a Hungarian holding vehicle structured as a corporate entity since the target’s incorporation, any capital gains realized on disposal may be exempt from corporate income tax (currently 9%), provided that the shareholding was registered as a reported participation and held for at least one year. Profit distributions made by the holding vehicle to an individual shareholder are generally subject to 15% personal income tax and 13% social contribution tax, the latter being subject to an annual cap. If the individual instead holds the shares directly, capital gains realized on the sale of the shares are similarly taxed at 15%, together with the 13% social contribution tax, also subject to the applicable annual cap.