This note presents a case study of a Czech limited liability company (s.r.o. / a.s.) investing its corporate liquidity in Czech government bonds (státní dluhopisy).
This analysis examines the key accounting aspects in accordance with Czech GAAP, the applicable tax treatment, and the financial performance of the transaction.
This content is for informational purposes only and does not constitute investment advice or a financial recommendation.
Investment Case Study
Operating parameters:
| Parameter | Value / Details |
| Investment company | Czech Trade s.r.o. (Czech company) |
| Reverse liquidity | 5 000 000 CZK |
| Instrument | Czech Republic Bond 2022–2028, 3.50% Fixed-Rate Coupon |
| Face value per unit | 10 000 CZK |
| Quantity purchased | 500 units |
| Purchase price | 100% (at par) |
| Date of purchase | July 1, 2025 |
| Due date | July 1, 2028 (duration: 3 years) |
| Annual gross coupon | 3,50 % → 175 000 CZK/year |
| Coupon payment | Annual (July 1) |
| Securities account | SCP account at a Czech custodian bank |
Sovereign rating of the Czech Republic:
| Agency | Grade | Perspective |
| Moody´s | Aa3 | Stable |
| S&P Global | AA- | Stable |
| Fitch | AA- | Stable |
Accounting treatment (Czech GAAP)
Classification In the case of held-to-maturity investments, bonds are recorded in account 065 – Cenné papíry držené do splatnosti (held-to-maturity securities), valued at acquisition cost without revaluation to fair value.
Note: Bonds held to maturity are not subject to fair value measurement. Therefore, there are no changes in value that affect the income statement during the life of the security. In the event of a permanent impairment, a provision (impairment loss) must be recognized.
Tax profile
Withholding Tax (WHT) Czech law provides for a full exemption from withholding tax (srážková daň) on interest from Czech government debt securities (government bonds). Therefore, coupons are paid gross: WHT = 0%.
Standard Corporate Income Tax Treatment The coupons are included in the standard taxable income of the s.r.o. and are subject to the corporate income tax rate (daň z příjmů právnických osob) of 21% in effect for the 2025–2028 tax period.
Capital gain at maturity Purchase made at par (100%): no capital gain at maturity. In the case of a purchase below par (discount) or above par (premium), the difference between the redemption value and the purchase cost is, respectively, taxable or deductible in the year of maturity.
Financial Analysis
Net return on investment
| Concept | Amount (3 years) |
| Invested capital | 5.000.000 CZK |
| Total gross coupons | 525.000 CZK |
| 21% DPPO on coupons | 110.250 CZK |
| Total net coupons | 414.750 CZK |
| Principal repaid at maturity | 5.000.000 CZK |
| Annualized net return | ≈ 2,77 % a.a. |
- Money market funds and long-term bonds offer higher returns, but come with greater duration risk and/or lower guaranteed liquidity.
Operational considerations and risks
- Securities account (majetkový účet): The s.r.o. must open a securities account with the CDCP or a custodian bank. The setup costs are minimal, but they should be budgeted for and recorded as incidental investment expenses.
- Early liquidity: The securities are tradable on the secondary market. If sold before maturity, the security must be reclassified, and the gain or loss on disposal must be recorded as extraordinary financial income or expense.
- Interest rate risk: By purchasing at par and holding the security until maturity, the company is protected against market risk related to the price. The risk remains in the event that an early sale becomes necessary.
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