News in brief, July 2022
Last month’s tax and legal news in a few sentences.
7 July 2022 In brief
- The chamber of deputies has approved the ratiﬁcation of a treaty between the Czech Republic and the Republic of San Marino on the prevention of double taxation relating to income and property taxes and on the prevention of tax evasion and tax avoidance. The government has also negotiated a double taxation treaty with Qatar and has already referred it to the chamber of deputies.
- A government bill on the abolition of electronic reporting of sales passed its first reading in the chamber of deputies.The government has submitted to the deputies a draft amendment to several tax laws, proposing, inter alia, to increase the limit for VAT registration, modify the lump-sum tax regime, and extend the use of extraordinary depreciation.
- An amendment to the Excise Duty Act containing the transposition of the recast version of Council Directive 2020/262/EU has been published in the Collection of Laws.
- The Ministry of Finance's Financial Bulletin 9/2022 has published an overview of double taxation treaties valid in the Czech Republic as at 21 June 2022.
- Financial Bulletin 10/2022 published a decision on the waiver of value added tax due to an extraordinary event. Subsequently, the Ministry of Finance issued a press release on this decision revoking the waiver of VAT for the supply of electricity or gas for November and December 2021, with legal effects only from the date the decision in the review proceedings becomes final and conclusive. The Ministry of Finance has clarified that there will be a change in VAT-related obligations for the taxable periods in question: taxpayers will not be obliged to file, e.g., additional tax returns for November, December or the fourth quarter of 2021 nor will they be entitled to an additional VAT deduction. Consumers will not have to refund VAT already waived. The annulment of the original decision does not entail any additional interventions in the accounting area. The original decision was revoked because of insufficient reasoning and inconsistency with EU law.
- The financial administration recommends that payers of road tax obliged to file a tax return for trucks and trailers with a maximum authorised weight of 12 tonnes or more check whether they have not breached their obligation to declare and pay tax on trucks and trailers for the 2021, 2020, and 2019 taxable periods. The financial administration has also published information summarising the new features of the amendment to the Road Tax Act with effect from 1 July 2022.
- The GFD has issued information for public benefit taxpayers on how to properly complete their corporate income tax returns for the purpose of limiting deficiencies in asserted data.
- The financial administration has simplified access to the Moje Daně portal, allowing access to foreign persons not recorded in the Register of Persons and therefore ineligible to access the portal via a data box or a guaranteed identity (NIA). The financial administration will now allow applying for the activation of a user account via a one-page electronic form.
- Amendment to the Income Tax Act No. 142/2022 Coll. has reduced the calculation of non-cash income in form of the free provision of a low-emission motor vehicle to an employee for business and private purposes to 0.5% of the vehicle's input cost. The amendment is effective from 1 July 2022 but applicable for the entire 2022 taxable period. The GFD has issued information in this respect addressing in particular the question of how employers (payers) should proceed during the annual settlement of employees’ income taxor when issuing a certificate of taxable income from employment where an employee files their own income tax return.
- The GFD has published a follow-up to the FAQs, including practical examples, concerning the reporting obligation on reportable cross-border arrangements (DAC6).
- The European Parliament has issued a draft report on the Directive to Prevent the Misuse of Shell Entities for Tax Purposes, recommending that the text be approved with certain modifications (e.g., postponing the effective date to 1 January 2025). The Members of the European Parliament could vote on the draft directive at the end of the year. The crucial factor will then be its approval by all member states in the EU Council.
- The OECD has published comments on the rules for excluding regulated ﬁnancial services from the Pillar 1 framework (allocation of a share of profits from the sale of goods or consumption of a service to the country of sale or consumption), as well as on two other documents relating to Pillar 1. These documents concern the rules for determining Amount A to be taxed in the market country and the process for resolving disputes between the market country and the country in which the profit has so far been reported under the existing rules.
- EU finance ministers have adopted a directive extending the period of application of the optional reverse charge mechanism for goods and services with a high risk of VAT fraud until 31 December 2026.
- The European Commission has published its annual report on taxation for 2022, highlighting that EU member states' tax revenues have fallen for the first time since the 2009 ﬁnancial crisis. The accompanying report describes the most significant tax trends in member states over recent years.