7 February 2019
Latest news - February 2019
Last month’s tax and legal news in a few sentences.
- The chamber of deputies overrode the senate’s veto and abolished the waiting period (“karenční doba”), meaning that employees will receive wage compensation also for the first three days of sickness. The amendment to the Labour Code is yet to be signed by the president. The waiting period will be cancelled from 1 July 2019. Employers will be compensated for this by reducing their sickness insurance premium payments by 0.2 percentage points (from 2.3% to 2.1%), meaning that the total social security premium paid by employers will be reduced from 25% to 24.8%. As a result, the employees’ tax burden will also decrease, albeit negligibly – the super-gross wage serving as a tax base will be “only” 133.8% of the gross wage rather than 134%.
- On 16 January 2019, the Czech Republic applied for the possibility to introduce a general VAT reverse charge mechanism: the regime applies to all taxable supplies of goods and services in individual transactions exceeding EUR 17 500 (CZK 450 000). The application has been filed with the European Commission, which will submit it to the Council of the European Union for approval. Once approved, the legislative process in the Czech Republic will be initiated. The measure is to be implemented effective 1 July 2020.
- The Government has discussed the proposed amendment to the Act on Business Activities on the Capital Market (Capital Market Undertaking Act).
- The Government heard the progress report on negotiating international tax treaties and related protocols as at 15 January 2019.
- The General Financial Directorate published Instruction D-40 setting uniform currency rates for the taxable period of 2018.
- The Ministry of Industry and Trade has published on its website the Entrepreneur’s guide to Brexit implications. The guide is updated on a regular basis. To support exporters, the MIT also opened an export green line: telephone operators at 800 133 331 are ready to answer questions concerning Brexit. BusinessInfo.cz portal introduced a special feature: Brexit through exporters’ eyes, which is continuously updated, based on entrepreneurs’ questions.
- The chamber of deputies upheld its originally proposed amendment to the Insolvency Act. The amendment intends to make the discharge of debt accessible to more debtors. If signed by the president, debtors seeking a discharge will be facing two major changes: before entering the debt discharge, it will no longer be necessary for the debtors to prove that they will manage to repay at least 30% of their debts to their creditors over the five years of the discharge term – it will suffice if their income covers the statutory minimum plus the monthly remuneration for the insolvency trustee and the same amount for the creditors. A change also awaits debtors at the end of the debt discharge process: they will not have to have repaid the 30% of debts to pass the debt discharge – it will suffice if they prove to the court that they made all efforts that could be reasonable requested of them to satisfy their creditors’ claims.
- The European Commission initiated a discussion on changing the vote on tax matters. Member states should open the debate on extending the qualified majority vote to all tax matters in the EU. National vetoes of votes on tax matters should end by 2025 at the latest. This would replace the current unanimous vote.
- In cooperation with the G20 countries the OECD has agreed to continue work on a common, global solution of tax challenges arising from the digitalisation of the economy. A final solution is to be achieved in 2020.
- The Romanian EU presidency’s priority in the tax area will be the modernisation of the VAT system (primarily e-commerce), the debate on the common consolidated corporate tax base (CCCTB), the completion of the discussion of the Commission’s proposal for changes to excise duties, and the work on the proposal on the taxation of the digital economy.
- Some states did not wait for the digital taxation directive and have introduce unilateral measures already in 2019; these are, e.g., Austria, France, Italy, Belgium and the UK.
- OECD issued a report providing internationally comparable statistics and analyses of approximately 100 countries’ corporate income tax revenues, statutory and effective rates of corporate income tax, and tax incentives relating to research and development.
- Poland temporarily postpones or limits withholding tax rules for payments exceeding PLN 2 million (USD 530 000): under the new rules, the tax should be withheld in the amount equalling the domestic tax rate, and the reduced tax in the amount under international treaties would only be claimed subsequently. The postponement does not concern other withholding tax requirements that are effective 1 January 2019.
- Ireland has become the 19th country to deposit the ratification documents to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) with the depository (OECD). It will hence start to apply the measures adopted in its treaties with countries that have also ratified the MLI (e.g. Australia, France, Japan, Poland, Austria, Slovakia, United Kingdom) from 1 May 2019. The ratification of the convention by the Czech Republic is now waiting for approval by the chamber of deputies.