Latest news - September 2018
Last month’s tax and legal news in a few sentences.
• To enhance transparency when granting subsidies, the Ministry of Industry and Trade introduced new measures applicable to calls announced within the Enterprise and Innovations for Competitiveness Operational Programme after 1 June 2018 that must be adhered to by applicants. These measures involve, for example, the obligation to ensure the fulfilment of duties arising from the Accounting Act, in particular the duty to disclose financial statements in a particular register, the duty to have beneficial owners recorded in the register of beneficial owners and the ban on issuing common equity certificates for members’ shares in limited liability companies. If these requirements are not met, an application for subsidy will be dismissed. Before filing an application, it is therefore necessary to determine whether all the requirements applicable to a specific call have really been fulfilled.
• The Ministry of Industry and Trade will again support cooperation between corporations and research organisations in the development of unique technological solutions. A new call to participate in the TRIO programme was announced on 3 September 2018. Applications will be accepted until the end of October 2018.
• The new Act on Distribution of Insurance and Reinsurance and the accompanying act amending a number of other related laws were published in the Collection of Laws under no. 170/2018 Coll. and 171/2018 Coll., respectively, both entering into effect on 1 December 2018. Compared with the regulations now in effect, the law implementing the EU legislation introduces a number of new regulatory measures when entering into insurance products and services. These measures comply with the European Commission’s overall concept of protecting consumers in the financial market by unifying regulatory principles and consumer protection rules across the financial market, ensuring the same level of consumer protection for various distribution methods, putting an increased emphasis on transparency and comparability of information about financial products (especially information about life assurance costs) and imposing higher professional requirements on persons operating within the insurance industry.
• Decree No. 192/2018 on the percentage share of individual municipalities in the national gross income from value added tax and income tax was published in the Collection of Laws.
• The General Financial Directorate issued information about the tax base correction under Section 42 (1)(b) of the VAT Act relating to supplies from/to the debtor whose insolvency is being solved via reorganisation.
• On its website, the GFD points out that a certificate securing the connection between cash registers reporting sales and ERS recipients will change on the part of the ERS recipients in September. Cash register users who wish to check whether their cash register is ready for such a change to be able to report sales without any difficulties should contact their cash register or cash register software vendors to make sure that their device is ready for the change of the SSL certificate and is compatible with certification authority DigiCert’s certificates.
• The financial administration entered into a memorandum on the mutual exchange of information related to Airbnb with the Prague City Council.
• On its website, the Ministry of Labour and Social Affairs draws attention to its plan to increase the intensity of inspections of illegal employment starting from September, which has been agreed by the representatives of the ministry, the State Labour Inspection Office and the Police of the Czech Republic. In addition to planned inspection activities, extraordinary nationwide inspections will be carried out irregularly in the entire territory of the CR from September to December 2018, focusing on the detection and elimination of breaches of regulations applicable to the illegal employment of Czech citizens, foreign nationals from countries outside the EU, and EU citizens. Extraordinary nationwide inspections will mostly focus on worksites such as construction sites, industrial and assembly productions, logistics centres, etc. The State Labour Inspection Office inspectors will carry out inspections in cooperation with the Police of the CR.
• At the end of August the government approved a draft double taxation treaty to be concluded between the Czech Republic and Senegal in the area of income tax and prevention of tax evasion and tax avoidance.
• An updated list of countries exchanging country-by-country reports under Section 13zb (2) of Act No. 164/2013 Coll., on international cooperation in tax administration, was published in the Ministry of Finance’s Financial Bulletin No. 7/2018.
• The Ministry of Labour and Social Affairs proposes to increase the minimum wage to CZK 13 700 from 1 January 2019. It also submitted for comments a draft amendment to the Labour Code with the proposed effectiveness from 1 July 2019, introducing, for example, a new fixed mechanism for minimum wage valorisation and a new legal concept of job sharing as a new flexible work regime, and also responding to CJEU case law regarding the transfer of employment rights and duties.
• The Ministry of Finance has submitted for comments a draft act on international cooperation in tax dispute resolution, transposing Directive (EU) 2017/1852 of 10 October 2017, on tax dispute resolution mechanism in the EU. Currently, double taxation and arbitration treaties allow taxpayers to approach the appropriate authorities where measures applied by any of the contracting states have resulted or will result in taxation contrary to the appropriate treaty. This procedure does not in fact change. Yet, in accordance with the DRM Directive, it will be codified in a new procedural rule comprehensively regulating international cooperation in resolving tax-related disputes under international treaties. The new regulation will be a special law in relation to the Tax Procedure Code and will be applied with respect to all contracting states. Some additional concepts such as the option of tax arbitration will apply to EU member states.
• As Chamber of Deputies’ Print No. 264, the government has submitted to the Chamber of Deputies the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS. The Czech Republic intends to use this convention to implement all minimum standards arising from the OECD’s BEPS initiative into its bilateral double taxation treaties.