Do Tax Exemptions on Government Bonds Lower Borrowing Costs? Evidence from the Czech Republic

Abstract

CHARLES UNIVERSITY FACULTY OF SOCIAL SCIENCES Institute of Economic Studies Do Tax Exemptions on Government Bonds Lower Borrowing Costs? Evidence from the Czech Republic Bachelor's thesis Author: Evgeny Frolov Study program: Bakalářský program Ekonomie a finance Supervisor: Mgr. Josef Švéda Year of defense: 2025 Declaration of Authorship The author hereby declares that he or she compiled this thesis independently, using only the listed resources and literature, and the thesis has not been used to obtain any other academic title. The author grants to Charles University permission to reproduce and to dis- tribute copies of this thesis in whole or in part and agrees with the thesis being used for study and scientific purposes. During the preparation of this thesis, the author used ChatGPT developed by OpenAI for better formulations. After using this tool/service, the author reviewed and edited the content as necessary and takes full responsibility for the content of the publication. Prague, July 29, 2025 Evgeny Frolov Abstract This thesis investigates whether tax exemptions on government bonds reduce sovereign borrowing costs, using the 2021 Czech income tax reform as a case study. The reform exempted interest income on EU-issued government bonds from income tax. To evaluate its impact on Czech bond yields,...

CHARLES UNIVERSITY FACULTY OF SOCIAL SCIENCES Institute of Economic Studies Do Tax Exemptions on Government Bonds Lower Borrowing Costs? Evidence from the Czech Republic Bachelor's thesis Author: Evgeny Frolov Study program: Bakalářský program Ekonomie a finance Supervisor: Mgr. Josef Švéda Year of defense: 2025 Declaration of Authorship The author hereby declares that he or she compiled this thesis independently, using only the listed resources and literature, and the thesis has not been used to obtain any other academic title. The author grants to Charles University permission to reproduce and to dis- tribute copies of this thesis in whole or in part and agrees with the thesis being used for study and scientific purposes. During the preparation of this thesis, the author used ChatGPT developed by OpenAI for better formulations. After using this tool/service, the author reviewed and edited the content as necessary and takes full responsibility for the content of the publication. Prague, July 29, 2025 Evgeny Frolov Abstract This thesis investigates whether tax exemptions on government bonds reduce sovereign borrowing costs, using the 2021 Czech income tax reform as a case study. The reform exempted interest income on EU-issued government bonds from income tax. To evaluate its impact on Czech bond yields,...