News in brief, August 2021
Last month’s tax and legal news in a few sentences.
3 August 2021 In brief
DOMESTIC NEWS IN BRIEF
- The new Building Act and amendments to related laws have been published in the Collection of Laws under No. 283/2021 and No. 284/2021.
- Act No. 269/2021 Coll., on identity cards, became effective on 2 August 2021. In connection with this, several other regulations (no. 270/2021 Coll.) have been amended and a decree implementing the act has been published. This legislation introduces a new type of ID card that will be harder to forge or abuse as it will contain a highly secure contactless chip and biometrics (the holder’s facial image and two fingerprints), making it possible to travel without a passport.
- Financial Bulletin No. 30/2021 deals with the payment of VAT under the one-stop-shop regime (OSS) from 1 July 2021.
- Financial Bulletin No. 29/2021 discloses information on the accession of Hungary to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("Multilateral Instrument" or "MLI"). The same information was disclosed in Financial Bulletin No. 28/2021 regarding Croatia.
- Financial Bulletin No. 27/2021 discloses the following:
- a list of countries exchanging reports under the Act on International Cooperation in Tax Administration (CbCR)
- a list of contract states applying a common standard for reporting and decisive dates
- a list for the purposes of meeting reporting duties (i.e. the reporting Czech financial institution informs the reported person who is an individual that they will collect and report information about the reported person before making the first report to the tax administrator).
- The Ministry of Industry and Trade organised a webinar entitled What is Trade like Half a Year after Brexit?
- The chamber of deputies passed an amendment to the Act on Sickness Insurance, extending options to obtain both long-term carer’s allowances and carer’s allowances. The amendment also modifies paternity leave, extending it to two weeks.
- The chamber of deputies approved a bill on children’s day care groups. Care for children from six months until the commencement of their compulsory schooling will be more widely available due to stable and predictable financing. The amount to be paid by parents of children younger than three years shall be a maximum of CZK 4,000 monthly.
- Child benefits have increased by more than one fourth from this July. The range of families entitled to this type of support has also expanded.
- The Ministry of Industry and Trade has prepared an informative pension application (Informativní důchodovou aplikace (IDA)), providing comprehensive and comprehensible information about the number of pension insurance years reported in the system and the expected pension amount.
- The Czech customs administration launched an application for citizens for filing customs declarations for consignments costing less than EUR 150.
- The customs administration released information that temporarily, from 1 July 2021, VAT on the import of consignments costing less than EUR 22 from non-EU countries will not be collected. Further information is disclosed on Celnička.cz or the financial administration’s website.
- An amendment to the VAT Act and the Customs Act, introducing new VAT- and customs-related rules for e-commerce (see also the two bullet points above) was referred back by the senate to the chamber of deputies.
- The senate referred back to the chamber of deputies a draft amendment to the Act on Banks (see also our separate article) with a single proposal to amend the Income Tax Act. The senate proposes to renew the exemption of revenues flowing to Czech non-residents from bonds issued by Czech residents abroad, excepting revenues flowing to related parties, which had been cancelled via the tax package.
FOREIGN NEWS IN BRIEF
- Following an agreement on changes to international taxation reached by the OECD and G20, allowing for the taxation of profits in the market country regardless of physical presence (Pillar 1) and introducing a minimum tax of 15% (Pillar 2), the European Commission issued a factsheet on the recent agreement and implementation plans at the EU level. The method of implementing Pillar 1 in the EU has yet to be decided upon. Pillar 2, primarily aimed to reduce tax competition among the states, will be implemented via a directive setting a minimum global tax of 15% on profits consolidated at the level of controlling companies situated in the EU and establishes the tax non-deductibility of expenses to which the minimum tax was not applied. The pertaining FAQs can be found here.
- The European Commission continues in the consultation process for a legislative proposal aimed at mitigating the debt-to-equity bias in tax. The commission is considering either disallowing the deductibility of interest payments or creating an allowance for equity by enabling the tax deductibility of notional interest for equity.
- The European Commission released a package of reforms aimed at ensuring the EU meets its emission reduction goal of a 55 percent reduction of 1990 emission levels by 2030. There are four key pillars to the reforms, all being phased in over four years:
- tightening of emission caps when trading with emission rights
- expanding the sector coverage of emission rights to a broader scope of sectors
- progressive withdrawal of free permits for emission intensive, trade exposed sectors
- introduction of a carbon border adjustment mechanism, i.e. carbon tax on imports of certain goods into the EU.