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The Financial Administration issued information about administration of taxes in affected entities, both individuals and legal persons, with regard to the floods that occurred this month in the territory of the Czech Republic. For the sake of clarity, we will deal separately with individual areas.

General

• Deferral of taxes’ payment or distribution thereof into instalments can be applied for. The application can also be filed retrospectively. The form is available here.
• Remission of default interest and fines for late payment of taxes and filing of a tax return (including the inspection report) can be applied for.
• Affected individuals are exempt from administrative charges in connection with tax proceedings.

Real Property Tax

• Municipalities can exempt real property (both buildings and land) affected by floods from tax for a period of up to five years by issuing a decree or adopting measures of a general nature. The measures/decree have to come into effect no later than on 31 March 2025.

Value Added Tax

• Value added tax returns, inspection and summary reports have to be filed within the standard deadline (by 25 September 2024 for the taxation period of August 2024); waiver of related sanctions can be applied for in the case of late filing (see above).
• Provision of monetary gifts by a VAT payer (in the cash / cashless form) is not subject to VAT and, as a result, is not reported in a tax return.
• Provision of material gifts / services:
  • Where the payer purchased them for their own economic operation and applied for deduction, output tax will be applied in providing the gift;
  • Where the payer did not purchase them for their own economic operation, the payer is not entitled to tax deduction. Provision of a gift is not disclosed in the VAT return; and
  • If the payer provided a service without consideration and applied tax deduction in the directly related supplies, the payer will apply output tax in such provision.

Income Tax

• A decrease in or waiver of income tax advances can be applied for. The form is available here.
• The tax base can be reduced (up to 30%) by gifts provided for purposes specified by laws (e.g. environmental, humanitarian and medical purposes).
• Received gifts  in connection with the floods are exempt from income tax.

Detailed information can be found on the Financial Administration’s website.

Lenka Kolmanová
kolmanova@clarksonhyde.cz