Latest news, January 2020
Last month’s tax and legal news in a few sentences.
10 January 2020 In brief
DOMESTIC NEWS IN BRIEF
- Regulation No. 358/2019 Coll. stipulates basic compensation rates for the use of road motor vehicles and meal allowances for 2020 and slightly reduces the average price of fuel. It also introduces the average price for one kWh of electricity for the purpose of calculating the consumption of fuel by electric cars.
- The General Financial Directorate issued Instruction D-29, regulating the waiver of penalties for the failure to file VAT ledger statements. The new instruction de facto copies existing Instruction D-21 regulating the waiver of charges additional to tax and supplements VAT ledger statement specifics.
- From 1 January 2020, the minimum wage will increase by CZK 1 250, from CZK 13 350 to CZK 14 600. Along with the increase in the minimum wage, affecting approx. 150 000 employees, the guaranteed wage will also grow from a range between CZK 13 350 and 26 700 to CZK 14 600 and CZK 29 200. The guaranteed wage represents the lowest earnings paid according to eight pay-grade levels depending on the required qualification and intensity of work. The guaranteed wage is received by a significantly higher number of employees than the minimum wage.
- The government submitted a large draft amendment to the Labour Code to the Chamber of Deputies. The amendment changes the treatment of vacation; according to the amendment, an employee’s weekly working hours will form the basis for assessing vacation, in hours. It also introduces a job-sharing concept, simplifies the delivery of documents to employees, reduces the administrative burden associated with agreements to perform work, and transposes an amendment to the EU Directive on the Posting of Workers.
- A notice of the Ministry of Labour and Social Affairs disclosing the average wage in the national economy for the first to the third quarter of 2019 for the purposes of the Act on Employment was published in the Collection of Laws (under No. 346/2019 Coll.)
- An amendment to certain laws affecting the financial market regulation passed through the third reading in the deputies’ chamber. The amendment adapts Czech legislation to Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.
- On its website, the Ministry of Finance updated an overview of effective double taxation treaties.
- The Ministry of Finance also submitted to the government for discussion a proposal to negotiate a double taxation treaty between the Czech Republic and San Marino.
- The financial administration draws attention to an amendment to the Real Estate Tax Act changing the conditions for the exemption of land with certain landscape characteristics from tax.
FOREIGN NEWS IN BRIEF
- KPMG has released the KPMG Digital Economy Tax Tracker mobile app - now covering BEPS2.0, digital service taxes, and VAT/GST developments across 63 countries. You can download it free-of-charge from the Apple App Store or Google Play.
- According to a CJEU advocate general, deferring the payment of an undisputed part of an excess deduction until the examination of all taxable supplies is completed is inconsistent with the VAT Directive, as it violates the principle of VAT neutrality.
- ECOFIN adopted a proposal for the taxation of energy products within the EU. The council calls on the European Commission to adopt measures to facilitate the transformation into the climate-neutral EU in compliance with obligations deriving from the Paris Agreement. The existing version of the directive from 2003 must be reviewed and updated.
- The European Commission sent reasoned opinions to the Czech Republic and other countries concerning their failure to complete the transposition of the EU Tax Dispute Resolution Directive (2017/1852) into domestic law. If the relevant member states fail to act within the next two months, the commission may decide to proceed with a case before the CJEU.
- At a meeting of the EU Competitiveness Council, the EU Council of Ministers failed again to reach agreement on the introduction of public country-by-country reporting (CbCR). A majority of 16 countries need to vote in favour of the proposal for it to proceed, but there were only 14 votes in favour of the proposal.
- In December, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (2016) (MLI) entered into force in respect of Ukraine, Switzerland and Canada. The MLI was also approved by the Moroccan government and the Czech parliament. The MLI was ratified in Costa Rica and will enter into effect three months after the country deposits its instruments of ratification with the OECD. Kenya and Oman signed the MLI, bringing the total number of signatories to 92 jurisdictions.