Latest news, February 2020
Last month’s tax and legal news in a few sentences.
5 February 2020 In brief
DOMESTIC NEWS IN BRIEF
- From 2020, the parental allowance to take care of a family’s youngest child increases from CZK 220 thousand to CZK 300 thousand and from CZK 330 thousand to CZK 450 thousand for two and more children born simultaneously. This increase applies to all recipients that have not yet utilised the total parental allowance amount as at 1 January 2020. The amendment also increases the number of hours in a month which a child may spent in pre-school facilities from 46 to 92.
- From 1 January 2020, following the average wage growth, the maximum unemployment benefit amount increased from CZK 18 111 to CZK 19 389 a month, and the maximum retraining benefit rose from CZK 20 297 to CZK 21 729 a month. The amount of earnings permitted to be generated by jobseekers who are not on the dole and wish to make some extra money from a non-colliding job increased from CZK 6 675 to CZK 7 300 a month.
- The Act on the Right to Digital Services (12/220 Coll.) entered into effect on 1 February 2020. It guarantees citizens direct electronic communication with the authorities, excepting matters that cannot be arranged through the internet, such as vehicle roadworthiness testing or the physical collection of identity cards. To prove one’s identity, e-ID cards or other identity cards used by banks will fully suffice.
- The deputies passed an amendment to the Labour Code in the first reading, regulating e.g. a job-sharing concept.
- A bill on digital services tax passed through the first reading in the deputies’ chamber in January and is now to be discussed by the budget committee. The government expects to collect as much as five billion Czech crowns for the budget. In response, the United States of America has threatened to introduce countermeasures such as customs duties on Czech products.
- The Chamber of Deputies discussed an amendment to the Tax Procedure Rules in the second reading, introducing e.g. the Moje daně portal and proposing, for example, to extend the deadline for refunding excess VAT deductions, to change default interest rates, or to cancel the five-day tolerance period upon a late submission of a tax return or a late tax payment.
- An amendment transposing EU legislation on VAT and mandatory disclosure rules (DAC 6) into Czech legislation is still waiting for the second reading in the Chamber of Deputies. The transposition deadline has already expired in both cases and the European Commission has sent the Czech Republic (and other countries not meeting the transposition deadline) a letter calling them to complete the implementation. Whereas EU legislation on VAT has already been in effect from 1 January 2020 and the Ministry of Finance has issued some information on how to proceed in this situation, the legislation on mandatory disclosure rules should only enter into effect on 1 July 2020; the reporting duty under DAC 6 shall apply to cross-border arrangements implemented after 25 June 2018.
FOREIGN NEWS IN BRIEF
- The European Commission has presented the European Green Deal, a roadmap containing actions to make Europe the first climate neutral continent by 2050. In particular, the roadmap of key actions provides an indicative timetable of June 2021 for a proposal to revise the Energy Taxation Directive.
- The EU and the UK will enter into intensive discussions on a new partnership and free trade agreement during the transition period, set to run until 31 December 2020.
- Members of the European Parliament (MEPs) have called on the EU Commission and the member states to agree on a joint and ambitious EU position on the taxation of the digital economy and supported the Commission’s commitment to propose an EU solution if agreement cannot be reached internationally by the end of 2020.
- The Austrian Ministry of Finance has published guidance on the Austrian digital services tax. The tax will apply at a rate of 5% of the fee earned by the service provider with deductions available for services obtained from other unrelated advertising service providers.
- The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (2016) (MLI) has entered into force in respect of Denmark and Iceland. The MLI was also ratified by Chile, Estonia and Indonesia and will enter into effect three months after each jurisdiction deposits its instrument of ratification with the OECD. Liechtenstein deposited its instrument of ratification with the OECD in December 2019, the MLI will enter into force for Liechtenstein on 1 April 2020. Jordan also signed the MLI, bringing the total number of signatories to 93 jurisdictions.
- The OECD has published updated country-by-country reporting (CbCR) guidance. For more information, please refer to the guidance and summary.
- The OECD has published a report on the exchange of tax rulings, in it assessing the progress of 112 jurisdictions on the spontaneous exchange of information on tax rulings. The report notes that 30 thousand in-scope exchanges of tax rulings have taken place.
- The Dutch Ministry of Finance has published a list of low-tax jurisdictions for 2020. The list captures jurisdictions that are on the European Union’s list of non-cooperative jurisdictions, and jurisdictions which have a corporate tax rate of less than 9%. In addition, the following jurisdictions have also been added to the Dutch list for 2020: Anguilla, the Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands, Turkmenistan, Vanuatu and the United Arab Emirates.
- A decree has been published in Poland deferring a key change to the Polish withholding tax regime until the end of June 2020. The deferred measure relates to the obligation to collect withholding tax regardless of relief at source being available under a double tax treaty or a domestic exemption in Polish law based on an EU directive.