COVID-19: Tax Liberation Package II

On 24 March 2020, the Ministry of Finance published Financial Bulletin 5/2020, specifying other measures to mitigate the impact of the COVID-19 pandemic (Tax Liberation Package II). Measures that must be in form of laws have already been or will be submitted to the Chamber of Deputies.

Waiver of income tax prepayments for June
The Ministry of Finance decided on a general waiver of income tax prepayments payable on 15 June 2020, without an obligation to file an application. This only applies to taxpayers using calendar years as taxable periods. 

Please note that individual applications for the waiver of income tax prepayments payable on 15 September and 15 December may also be filed, but only where justified. The same applies to fiscal years.
 
Waivers relating to immovable property acquisition tax 
The general waiver of a penalty for the late filing of an immovable property acquisition tax return and of default interest for the late payment of this tax, or its prepayment, applies to all tax returns with a filing deadline between 31 March and 31 July 2020. This involves immovable property acquired and entered in the Real Estate Register after 1 December 2019 if a tax return is submitted and the tax paid before 31 August 2020. Accordingly, it will be possible to file immovable property acquisition tax returns and pay the relevant tax, or its prepayment, until 31 August 2020. The general waiver also applies to interest on the deferred amount.

Waiver of penalties for the late filing of VAT returns
If a penalty relating to a VAT ledger statement has been waived based on an individual application filed in connection with the coronavirus pandemic (i.e. a penalty other than the basic penalty of CZK 1,000 to which the general waiver applies), the penalty for the late filing of a VAT return for the same period shall also be waived automatically, on the condition that the payer files a VAT return no later than on the date a late VAT ledger statement is submitted.

Waiver of selected administrative fees applicable to customs
The tax liberation package also allows for a general waiver of selected administrative fees applicable to the customs area, in particular the administrative fee associated with the application for a refund of taxes on import or with the waiver of a customs duty underpayment, or the administrative fee associated with the application for relief from tax or customs duty pursuant to the Union Customs Code. The waiver applies to all applications filed in the period started on the decision’s effective date, i.e. 24 March 2020, and ended 31 July 2020.

Tax relief measures proposed by the Ministry of Finance that are yet to be discussed by parliament: 

Suspended obligation to electronically report sales (ERS)
The suspension applies to all entities falling to all ERS phases over the period of emergency measures and over the following three months. This means that no taxpayer will have to report their sales using the ERS system and no monitoring will be performed.

The Ministry of Finance’s proposal was approved by the deputies on 24 March 2020 and is now heading to the senate. 

Introduction of a ‘loss carry-back’ concept (tax losses to be utilised on a retrospective basis) for 2020
If taxpayers recognised a tax liability for 2018 or 2019 and plan to report a tax loss for 2020,  they may deduct this loss from the tax bases for 2018 and 2019, giving rise to a refund of income tax.

The retrospective utilisation of tax losses will be possible through an additional income tax return filed for the 2018 and 2019 taxable periods. Simultaneously, the tax overpayment will be refunded to the taxpayer’s account based on the taxpayer’s application.

Currently, this is only a proposal of the Ministry of Finance that has not yet been submitted to the Chamber of Deputies. The final version of this measure may therefore change during the legislative process.

 

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