Dear Readers,
Please find below our short news for February 2024:
- A while after the consolidation package, which, among others, changed provisions of the Value Added Tax Act, had been approved, another bill amending the Value Added Tax Act was published on VeKLEP on 2 February 2024. This bill involves a very extensive amendment that we describe in a dedicated article here. This bill has been in the comment procedure and is proposed to come into force on 1 January 2025. Below are short examples of some of the proposed changes:
- The turnover for the purposes of VAT registration will newly be calculated for the period from 1 January through 31 December;
- The deadline for correction of the tax base will be extended from three to seven years;
- The limited entitlement to tax deduction in selected passenger vehicles will be cancelled effective from 1 January 2027; and
- The period of time for applying the tax deduction entitlement will be reduced from three to two years. It will only be possible to exercise the entitlement to tax reduction from debit notes for 12 months.
- The Financial Administration published Financial Newsletter No. 3/2024 - a List of States presented in the EU List of Non-cooperative Jurisdictions for Tax Purposes approved by the EU Council on their website.
- Tax deductions for research and development have in long term been used by companies only rarely due to frequent contradicting views of the Financial Administration or due to challenging administrative requirements. The Financial Administration, in cooperation with experts from the Technological Agency of the Czech Republic (TACR) and the Government Council for Research, Development and Innovation, is preparing a pilot project involving a unified questionnaire (a technical card), which will be completed and presented by a taxpayer in order to have their compliance with tax deduction eligibility criteria for research and development assessed. Taxpayers will also be able to use the ex ante assessment, e.g. prior to commencing their work. This project’s purpose is to enhance legal certainty and to encourage firms to invest in research and development. More information about the project is available here.
- The Ministry of Labour and Social Affairs prepared an amendment to the Labour Code, which transposes a directive of the European Parliament and the Council on adequate minimum wages in the European Union. This amendment is intended to introduce a minimum wage indexation mechanism, cancel the duty of a written vacation schedule, reduce the number of work groups from eight to four, etc. Text of the bill, which is at the very beginning of the procedure, is available here. We will keep you posted about the progress.
- An extensive amendment to the Act on Excise Taxes went through a comment procedure in February 2024. This amendment focuses for example on a conceptual change in regulation of small independent breweries, regulations in the area of waste oil management and a change in the procedure applied to determining cigarette prices for end consumers. The proposed effective date is 1 January 2025. You can read the bill’s text here. In the excise tax context, we want to draw your attention to the fact that rates of excise tax on tobacco products were increased as of 1 February 2024, and excise tax has been extended also to water pipe tobacco since 1 March 2024. A reduced rate at CZK 594/kg will apply to the water pipe tobacco. The basic rate in remaining smoking tobacco is CZK 3,300/kg.
- We have previously informed you about a new way of old age savings in the form of the Long-term Investment Product (the “LIP”). The Czech Ministry of Finance published an infographic and well arranged information about the old age savings supported in tax terms on their website here.
- Current legislation published in the Collection of Deeds is now available on the website e-Sbirka.cz established by the Ministry of Interior of the Czech Republic. The website was already launched as of 1 January 2024, but it was only in February that the legislation published in the Collection of Deeds in December 2023 was completed. The e-Sbírka (e-Collection) tool enables, free of charge, comparing texts of individual laws in terms of chronology.
- The tax season has been well under way and we therefore provide a refreshment of important deadlines related to income taxes below:
- 1 March 2024: Submission of a calculation of tax on income from dependent activities for the taxation period 2023 (hard copy);
- 20 March 2024: Submission of a calculation of tax on income from dependent activities for the taxation period 2023 (electronic);
- 2 April 2024: Submission of a calculation of tax withheld under a special tax rate for the taxation period 2023;
- 2 April 2024: Submission of an income tax return and payment of the tax for 2023 (the primary deadline for the submission pursuant to Section 136 (1) of the Tax Code – primarily for hard copy submissions);
- 2 May 2024: Submission of an income tax return and payment of the tax for 2023, if the tax return was not submitted within the primary deadline and will be submitted electronically; and
- 1 July 2024: Submission of an income tax return and payment of the tax for 2023 where the taxpayer is obliged to be audited or where the tax return was not submitted within the primary deadline and was subsequently filed by an advisor.
- The Financial Administration offers assistance to taxpayers in completing tax returns via consultation help lines that will be in operation from 4 March 2024. Office hours of filing rooms in tax offices will be extended in late March.
- Prices of vignettes have increased effective since 1 March 2024. The annual vignette for vehicles running on standard fuels will grow by CZK 800 from CZK 1,500 to CZK 2,300.
Marek Švanda
svanda@clarksonhyde.cz
