In Brief, February 2023

DOMESTIC NEWS

• The government is to discuss an amendment to the Labour Code that transposes the EU directive and introduces other changes, in particular changes to agreements for work outside employment, the regulation of distance work including the tax implications of the newly introduced lump-sum reimbursement of selected employee expenses, and the extension of the employer's information obligations. More detailed information HERE.
• The government is to discuss an amendment to the Investment Incentives Act and the related government decree. The most important changes are the simplification of the approval process, in which the government will be involved only for strategic investments, and the extension of incentives provided in the form of subsidies for the acquisition of assets.
• The government has instructed the Minister of Finance to extend the effectiveness of the extraordinary tax measures for citizens and firms that have decided to support Ukraine. The possibility to deduct gratuitous supplies from the tax base was in effect in 2022; the government intends to give donors and recipients of donations the possibility of tax relief for this year as well.
• The government has approved a draft amendment to the VAT Act implementing Council Directive (EU) 2020/284 on the introduction of requirements for payment service providers after incorporating public comments. The proposed effective date is 1 January 2024.
• The government has approved a bill introducing preventive restructuring measures for entrepreneurs in temporary financial difficulties. The bill transposes into Czech law some provisions of the EU Directive on Restructuring and Insolvency. The Czech legal system has so far lacked a regulation of a certain in-between stage where an entrepreneur is not yet bankrupt but an agreement with all creditors is no longer possible for various reasons.
• On 3 February 2023, the Czech Republic signed a treaty with Sri Lanka on the avoidance of double taxation in the field of income taxes. Once it is implemented, which can be expected from 2024, the original treaty from 1978 will cease to apply.
• On its website, the financial administration has published information about an amendment to the Energy Act introducing the levy on surplus market revenues. The Energy Regulatory Office is the administrator of this levy. The information on paying taxes to the accounts of the tax authorities is available HERE. The account of the tax authority for the Vysočina Region designated for payment of the levy on surplus market revenues is available in the Questions and Answers section.
• Regarding the number of questions and uncertainties in connection with the establishment of data boxes for entrepreneurs by operation of law, the financial administration points out that the specific method of communication depends on the nature of the document being delivered, its content and on the expressed will of the addressee of the document being delivered. See the GFD’s earlier Instruction D-7 available on the financial administration's website: GFD Instruction D-7 D.
• From February, employers can take advantage of discounts on social insurance premiums for employees working part-time (students, workers up to 21 years of age, newly retrained, disabled, caring for a child up to 10 years of age, or even persons over 55 years of age). Employers will pay 5% less in social security contributions. Further reductions in insurance premiums are planned for working pensioners. Read the details HERE.
• The Ministry of Industry and Trade reports on progress in the implementation of the EU's Single Digital Gateway for citizens and businesses. This involves the creation of an EU-wide online gateway through which citizens and businesses can access relevant information, electronic procedures and assistance services in areas such as business, social security, tax and many others, on an EU level. Under the leadership of the MIT, all ministries in the Czech Republic and all EU countries are participating in the project. Once the regulation has been fully implemented in the member states, citizens and businesses will get comprehensive information and access to specific electronic procedures from their homes to the whole EU.
• In January, the first meeting of the Expert Working Group on Expert Witness Law was held at the Ministry of Justice. In the summer, the MoJ already submitted a draft amendment to the Decree on Expert Witness Fees to the legislative process, aiming to raise the remuneration of experts to a level appropriate to the demanding nature and social necessity of the profession.

FOREIGN NEWS

• The European Commission has published its work programme for the first half of 2023. Regarding taxation measures, the Commission is expected to discuss in June a proposal for tackling the role of enablers involved in facilitating tax evasion and aggressive tax planning in the EU (SAFE) and a proposal for a new common EU system for the avoidance of double taxation and prevention of tax abuse in the area of withholding taxes (FASTER).
• The European Parliament has approved a report on a directive laying down rules to prevent the misuse of shell entities for tax purposes (the Unshell Directive). The report generally supports the wording proposed by the Commission but contains several amending proposals. However, these proposals are not binding on the EU Council. Negotiations on the final wording will continue between member states in 2023.
• The OECD/G20 Inclusive Framework on BEPS has released technical guidance to assist governments with implementation of the landmark reform to the international tax system which will ensure that multinational enterprises (MNEs) will be subject to a 15% effective minimum tax rate. The agreed technical guidance will be incorporated into a revised version of the Commentary on the Model Rules to be issued later in 2023. The EU has already adopted the relevant directive ensuring the uniform application of this reform across the EU from 2024.