In March 2019 the Czech government approved tax law changes, which for the most part entered into force on 1 April 2019. However, the effective date is different for some of the approved provisions. Below we have summarized the most important changes. Please be aware that this does not constitute a complete list.
- Implementation of principles arising from the ATAD (Anti Tax Avoidance Directive) – ie new principles seeking to limit cross-border tax optimization schemes. These changes introduce a new concept for calculating non-tax deductible excessive financial expenses, exit tax, rules for the taxation of controlled cross-border entities and concepts limiting the use of cross-border hybrid schemes. Moreover, the Czech Tax Code also specifically introduces an anti-abuse rule.
- Changes to the upper limit income tax bracket of CZK 2 Mio (approx EUR 77,866) to limit expense flat charge-off rates for the self-employed.
- Introduction of a new obligation to report payments in excess of CZK 100,000 (approx EUR 3,893) not subject to withholding tax in the Czech Republic to the tax administrator on a monthly basis (payments that are exempt or not subject to taxation in the Czech Republic based on the applicable double tax treaty provisions).
- Changes to the rules for preparing research and development projects.
- Possibility of reflecting the impact of IFRS as early as for the 2019 taxation period (financial institutions).
- New guidance on the taxation of vouchers (single-purpose and multipurpose vouchers).
- New provisions on the date of taxable supply (ancillary supplies to leases, long-term supplies).
- New rules for delivering tax documents.
- Finance lease definition (effective from 2020).
- Lease of real estate and taxation option restriction (effective from 2021).
- Adjustment to the VAT deduction concerning real estate repair services.
- VAT deduction claim only upon registration.
- Determination of the place of supply for electronically provided services.
As was mentioned in the introduction, the effective date of the approved tax law changes differs for some of the provisions summarized above. Therefore, we recommend carefully verifying the effectiveness of the amendments before taking any measures. We are of course happy to assist you with your questions at your convenience.
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