Blog

Dear Readers,

Please find below our short news for January 2024:

• Please be advised that the following laws became effective in January:
  • 349/2023 Coll., Act that Amends Certain Laws in Connection with Public Budgets’ Consolidation (the “Consolidation Package”);
  • 417/2023 Coll., Act that Amends the VAT Act (this law introduces the Register of Cross-Border Payments and Recipients Thereof); and
  • 469/2023 Coll., an amendment of the Energy Act that has an influence on determining the date of taxable supply in delivering electricity, gas, heat or cold or in providing related services as the date of producing a billing document, but no later than upon the expiry of the deadline for such billing’s provision under the Energy Act, or the date of identifying the actual consumption unless the Energy Act sets forth a duty to provide such billing. The date of taxable supply (the “DTS”) in water supplies is the date of identifying the actual consumption. The DTS for electronic communication services is the date of identifying the provided services’ scope.
     
• Act No. 462/2023 Coll., which introduces the long-term investment product (the “LTIP”), was published in the Collection of Laws. This law has introduced the term “Old Age Product” in Section 15a et seq. of the Income Tax Act, expanding the list of preferential supplementary pension savings and investment life assurances with payments for the Long-term Investment Product. The LTIP involves for example investments in stock, ETF or mutual funds. The tax base can be reduced by as much as CZK 48,000 in total for all Old Age Products in the individual income tax return from 2024. The employer can provide contributions for an employee’s LTIP. State aid does not apply to the LTIP.
   
• Act No. 416/2023, on Balancing Taxes for Large Multinational Groups and Large National Groups, was published in the Collection of Laws. This law has been effective since 31 December 2023.
   
• In Information dated 26 January 2024, the Financial Administration draws attention to the fact that the deadline for the filing of income tax returns for windfall tax is derived from the same provisions as the deadline for the filing of corporate income tax returns, whilst those deadlines are independent of each other. The deadlines can differ for individual tax returns for example due to case-by-case decisions on extending one of the deadlines pursuant to Section 36 of the Tax Code. More information is available here.
   
• Regulation No. 341/2023 Coll., on Determining the Level of Basic Rates for Foreign Meal Allowances for 2024 became effective on 1 January 2024. The rates of local meal allowances for 2024 are set forth by Regulation No. 398/2023 Coll.
   
• As a result of adopting Regulation No. 397/2023 Coll., on Determining the Level of the Lump-Sum Compensation for Costs in Remote Working for 2024, the lump sum of compensation for costs under Section 190a (1) (b) of the Labour Code was reduced to CZK 4.50 (from the original CZK 4.60) effective from 1 January 2024.
   
• The Financial Administration published the following Information of the General Financial Directorate in connection with the amendment to the VAT Act:
  • 12 January 2024: Information of the General Financial Directorate (the “GFD”) about changes in VAT rates from 1 January 2024.
  • 18 January 2024: Information of the GFD about applying VAT on a selected passenger vehicle from 1 January 2024. The Information applies to vehicles in the M1 category, for which a new threshold of the input tax has been defined at CZK 420,000.
  • 25 January 2024: Information of the GFD about determining the tax base upon a change in value added tax rates sums up the procedure in applying VAT in the case of advances received prior to a change in VAT rates and a taxable supply carried out after the change in the VAT rates.
     
• The Czech Statistic Office (the “CSO”) in cooperation with the General Customs Directorate issued a 2024 Intrastat Handbook. The threshold for Intrastat reports has increased to a new threshold in the amount of CZK 15 million from the original CZK 12 million since 1 January 2024. New Government Regulation No. 442/2023 Coll. provides for so-called simplified reporting for reporting entities that meet certain criteria. Additional new features in Intrastat in 2024 on the CSO’s website are available here.
   
• The Financial Administration published two Financial Newsletters in January:
  • GFD’s Instruction No. D-63 specifying uniform rates for taxation period 2023; and
  • Information of the GFD on publishing a translation of the updated OECD Directive about transfer pricing for multinational enterprises and tax administrations 2022.
     
• The Financial Administration published an Advice to Vendors Using Online Platforms about a duty to provide the online platform’s reporting operator with assistance needed in checks and identifications in connection with the Notice about Reported Activities Performed by the Reported Vendor. This Notice will be first filed for 2023. The Advice is available here.
   
• On 16 January 2024, a new Act on Accounting was published on the VeKLEP portal in a wording that will be discussed by the Government. The law is proposed to become effective on 1 January 2025. The published materials also include an explanatory note and a table showing differences from the existing law. The Act on Accounting addresses issues such as:
  • Implementation of International Financial Reporting Standards;
  • Emphasis put on preparation of financial statements;
  • Reduction in the number of entities that are obliged to keep accounting records; and
  • An increase in thresholds for a mandatory audit of financial statements.
     
• The Ministry of Interior of the Czech Republic (the “MIoCR”) launched an Electronic Collection of Laws and International Treaties as of 1 January 2024. The platform can, in certain cases, replace paid services that compare previous texts of laws with the effective ones. The operation of the e-Collection can be considered testing because it is still missing (as of 26 January 2024) legislation published in the Collection of Laws in December 2023. So far, the laws have not reflected for example the passed consolidation package. In addition to this, the MIoCR plans to launch the e-Legislation portal, to enter legislation of local governments in the e-Collection, and to publish interactive templates for the creation of generally binding regulations. You can read more about digitalising the laws of the Czech Republic here.
   
• What is also worth mentioning is digitalisation in the area of identity proofing. The application eDoklady (eID) was launched on Saturday, 20 January 2024. This app is available for mobile devices with the Android and iOS operating systems and provides an alternative to physical IDs, which remain valid also while using the app. Citizens can log into the application with an eGovernment mobile key, NIA ID, the bank identity, etc. The eDoklady app can be used in proving one’s identity at selected offices in the first phase. Details of this service are available here.
   
• The Financial Administration (the “FA”) brought attention to failure to use data boxes established under the law. The FA primarily expressed their concerns with regard to individuals-entrepreneurs who are obliged to file their tax returns electronically under the law. If a taxpayer files his or her tax return in a materialised form in 2024 and fails to correct this mistake even upon a tax office’s call to do so, the taxpayer will be obliged to pay a fine in the amount of CZK 1,000 under the Tax Code. We therefore recommend dusting off your log-in details and using and monitoring your data box. You can read more about “sleeping data box users” here.

Marek Švanda
svanda@clarksonhyde.cz