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Product tutorials: Securities trading on The Prague Stock Exchange.

How to trade stocks / certificates on The Prague Stock Exchange

I) Purchase of dematerialized securities

  • You should visit a branch of Česká spořitelna to conclude a Investment services contract and the Investment (Monetary) Account Agreement.
  • We will open an asset account in the Česká spořitelna continuous register for you.
  • The money determined for investing should either be deposited in cash or transferred into the account.
  • At a branch in person or by phone, you can give an order to buy a specific security, after giving the order, you will receive a confirmation containing the order details.
  • If the order is satisfied (matched), the securities will be credited to your asset account on the settlement day (two business days after the order is satisfied).
  • Intraday trading is possible. Immediately after the execution of purchase, it is possible to give an order to sell the bought securities, i.e. to order sale before the trade is settled.

II) Sale of dematerialized securities

Intraday trading is possible. Immediately after the execution of securities sale, it is possible to give an order to buy for the money from the sale of the securities, i.e. to use the money for purchase before the trade is settled.

  • Sale of securities bought through Česká spořitelna
    a) You can give an order to sell a specific security at a branch in person or by phone, and after giving the order, you will receive a confirmation containing the order details.
    b) If the order is satisfied, the securities will be debited from your asset account and money will be credited to you on the settlement day (two business days after the order is satisfied).
  • Sale of securities that are managed in the so-called unassigned asset account with CDCP (the account is not managed by any securities trader)
    a) You should visit a branch of Česká spořitelna to conclude a Contract on investment services and Contract on investment (monetary) account. We will open an asset account in Česká spořitelna continuous register for you.
    b) Then you will give an order to transfer securities from an unassigned account into the asset account in Česká spořitelna continuous register. You will give an order to sell a security, and after giving the order, you will receive a confirmation containing the order details.
    c) If the order is satisfied, the securities will be debited from your asset account and money will be credited to you on the settlement day (two business days after the order is satisfied).
  • Sale of securities managed on the asset acount through another securities trader
    a) You should visit a branch of Česká spořitelna to conclude a Contract on investment services and Contract on investment (monetary) account. We will open an asset account in Česká spořitelna continuous register for you.
    b) With the trader through whom your securities are managed in CDCP , you will give an order to transfer securities into the asset account in Česká spořitelna continuous register.
    c) You will give an order to sell a security, and after giving the order, you will receive a confirmation containing the order details.
    d) If the order is satisfied, the securities will be debited from your asset account and money will be credited to you on the settlement day (two business days after the order is satisfied).
  • Sale of securities bought through RM Systém
    a) You should visit a branch of Česká spořitelna to conclude a Contract on investment services and Contract on investment (monetary) account. We will open an asset account in Česká spořitelna continuous register for you.
    b) In RM-Systém, you will give an order to transfer securities into the asset account in Česká spořitelna continuous register.
    c) You will give an order to sell a security, and after giving the order, you will receive a confirmation containing the order details.
    d) If the order is satisfied, the securities will be debited from your asset account and money will be credited to you on the settlement day (two business days after the order is satisfied).

Details you should be aware of

  • risk of possible loss of the investment or the entire amount of the investment at the cost of options to achieve above-average yield

Setting up conditions and basic product operations

Basic product operations

  • Purchase/Sale at PSE in continuous trading (initial (opening) auction, continuous trading, final (closing) auction), continuous auction
  • Intraday Trades (trading before settlement)
  • Types of orders: Market, Limit, Stop Limit

Setting up conditions

  • Investment services Contract
  • Asset account in the register of Česká spořitelna
  • Investment account determined for the provision of investment services
  • The minimum investment volume is not set

Taxation of yields

Natural person - non-entrepreneur

Capital yield

Change of the conditions governing the income tax exemption with regard to the sale of securities
As of 1 January 2014 the statutory measure concerning taxation of securities comes into force.
 
Extension of the time test from 6 months to 3 years
Time test shall mean the shortest period of time during which it is necessary to keep the securities after their purchase in order to have the yield from their subsequent sale exempted from the income tax. Thus the importance of the time test consists in the fact that if the relevant security is held for a longer period than the determined minimum time after being purchased, the yields from the sale of such security are subsequently exempted from income tax. Where the income from the sale of securities is realized before the time-limit set for the time test such income is taxed. Hence the citizens have to state the income in the tax returns.
 
The time test for the income tax exemption applying to the sale of securities is changed from six months to three years. The new time test shall apply only to the investments made after 1 January 2014. In case of investments realized by 31 December 2013 the time test of six months shall apply.
 
The annual limit of CZK 100,000 applying to the exemption from the income tax on sale of securities
Regardless of the length of holding, income from the sale of securities and participation certificates (in case of termination of a unit trust) will be tax exempted if the sum of such income does not exceed the amount of CZK 100,000 in the taxable period. Therefore in case that the securities are sold for less than CZK 100,000 in the relevant year the income earned from such sale will be exempted from the income tax. On contrary, in case the securities are sold for more than CZK 100,000 then the obligation to state such income in the tax return will arise if the time test is failed. Such tax return can be applied to assert against such income also the expenses, or purchase prices for which the sold securities were acquired.
 
Shortening of the period for exemption from the sale of securities from 5 to 3 years
As for the persons whose overall total share in the registered capital or the voting rights in the company achieved at least 5% in the period of 24 months prior to their sale, the income from the sale of the relevant security will be newly tax exempted if the time between the acquisition and transfer of such security in case of its sale exceeds the period of 3 years (so far 5 years).

Dividend (coupon) yield

  • dividend / coupon payments are taxed at a withholding tax (15%), so paid dividend / coupon is the amount that has already been reduced and the yield is already include in the tax base

Interest yields upon mortgage-backed bonds issued till 31/12/2007 are not liable to tax. Interest yields upon mortgage-backed bonds issued after 01/01/2008 are liable to tax.

Natural person - entrepreneur (securities are included in business assets))

Capital yield

  • The profit from sale is liable to income tax (without regard to whether the period between the purchase and sale exceeded 3 years or not)

Dividend (or coupon) yield

  • The dividend / coupon payments are taxed at a withholding tax (15%), so paid dividend / coupon is the amount that has already been reduced and the yield is already include in the tax base

Interest yields upon mortgage-backed bonds issued till 31/12/2007 are not liable to tax. Interest yields upon mortgage-backed bonds issued after 01/01/2008 are liable to tax.

Legal person

Capital yield

  • The profit from sale is liable to income tax (without regard to whether the period between the purchase and sale exceeded 3 years or not)

Dividend (or coupon) yield

*The dividend / coupon payments are taxed at a withholding tax (15%), so paid dividend / coupon is the amount that has already been reduced and the yield is already include in the tax base

Interest yields upon mortgage-backed bonds issued till 31/12/2007 are not liable to tax. Interest yields upon mortgage-backed bonds issued after 01/01/2008 are liable to tax.

Important notice:
Česká spořitelna, a.s. would like to note that this materials does not represent tax consultancy and it is of the informative nature only. Česká spořitelna a.s. is not responsible for any damage or loss incurred as a consequence of the use of information contained in this document. The use of the stated information should be consulted with accounting, tax or legal advisors.





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