New Czech National Bank Reporting Rules

Companies (entities), which are obliged to submit regular reports, are divided into four categories:

a) Domestic entities – investors – involved in direct foreign investment holding interest / shares in foreign companies or providing or accepting loans in connection with such foreign investment exceeding at least 2.5 million CZK (approx. EUR 100,000 or USD 125,000) as of the end of calendar year;

b) Local entities – companies receiving direct foreign investment, (i.e. “subsidiaries”), where the share of the foreign investor on the local company or loans provided or accepted in connection with such direct investment in the Czech Republic exceed at least CZK 25 million (approx. EUR 1 million or 1.25 million USD) as of the end of calendar year;

c) any entity, whose total annual volume of foreign assets or liabilities reaches at least CZK 200 million (approx. EUR 8 million or USD 10 million); and

d) any entity whose total annual volume of financial loans provided or received in relation to foreign countries reaches at least CZK 100 million (approx. EUR 4 million or USD 5 million).

The entities are obliged to submit reports depending on the category they fall in as follows:

• Entities falling under a) and b) above report to CNB by the end of July of the following year for the year preceding,
• Entities falling under c) and d) above report to CNB within 25 days after the end of each calendar quarter,
• Entities classified under d) above report to CNB within 25 days of the end of each calendar month.

The Regulation also defines the contents of the individual reports for each category of obliged entities:

• Entities falling under letter a) above compile annual report on the “State of direct investment abroad” (form PB 71-01) in which they are expected to provide information on transactions, assets or liabilities abroad, especially identifying which entities receive such (Czech) investment, size of the shareholding in such company, funds involved, registered capital of such foreign company, capital funds, profit / loss balances of that foreign company etc.);
• Entities under letter b) compile report on the “State of direct investment in the Czech Republic” (form 72-01) which largely copies the extent of the report above (letter a) albeit in reverse order and including information on loans, return investment and the ultimate investor (owner) of the holding);
• Entities under letter c) file reports on the “Selected foreign assets and liabilities” (form PB 43-04) containing information on foreign transactions and position regarding assets or liabilities abroad, whether these involve export-related receivables or import-related liabilities, payment schedules related to long-term import liabilities, information on direct foreign investment, financial derivatives and foreign securities;
• Entities reporting under letter d) provide information on “Financial loans and accounts abroad” (form PB 42-12) and report on “Payment schedules for long-term financial loans received from abroad” (form PB 42-04) containing information on anticipated future payments / instalments related to foreign loans.

Reports (on forms PB 71-01 and 72-01) will be filed electronically using CNB’s own system and the government e-box system (which is a kind of closed, government operated, “e-mail” client system, where each incorporated entity has account by law).

As the amounts involved are not exceedingly large, whether for Czech investors investing abroad, or for foreign multinationals having local subsidiaries in the Czech Republic, local management should be instructed to check and make sure they comply with these reporting rules.