News in Brief, January 2024

DOMESTIC NEWS

• An amendment to the Investment Incentives Act was published in the Collection of Laws on 29 December 2023 and will take effect on 13 January 2024. The biggest change concerns the approval of applications for investment incentives, which will once again return to the competence of the Ministry of Industry and Trade. The government will remain responsible for approving strategic investment projects. Details of the amendment and other legislative changes relating to investment incentives can be found here.
• Most of the provisions of the act amending certain laws in connection with the development of the financial market and the promotion of old-age security came into effect on 1 January 2024. The act also includes an amendment to the Income Tax Act providing for the unification of tax support for old-age savings (including a newly introduced long-term investment product), a new regulation of the taxation of employee shares, and a simplification of proving research and development allowances. Details can be found in this issue, here and here and here.
• A decree amending certain decrees implementing the Accounting Act in connection with the keeping of accounts in a currency other than the Czech currency, the top-up tax, and the definition of net turnover was published in the Collection of Laws on 29 December 2023. More information can be found here and here.
• The act on the top-up tax for large multinational corporate groups and large domestic corporate groups was published in the Collection of Laws on 29 December 2023. We reported on new developments in this area in more detail in this issue of the Tax and Legal Update.
• An amendment to the Value Added Tax Act published in the Collection of Laws on 29 December 2023 with effect from 1 January 2024 introduces a reporting obligation for payment service providers.
• A decree setting the amount of a lump-sum compensation for teleworking for 2024 and a decree changing the basic compensation rate for the use of road motor vehicles and meal allowances and determining the average fuel prices for the purpose of providing travel allowances for 2024 were published in the Collection of Laws on 29 December 2023.
• An amendment to the Energy Act containing new rules for community energy was published in the Collection of Laws on 31 December 2023. It also contains a partial amendment to the VAT Act regulating the provision of certain related taxable supplies with effect from 1 January 2024.
• On 21 December 2023, the Banking Board of the CNB reduced interest rates by 0.25 percentage points. Default interest shall be 15% (repo rate increased by 8 percentage points) for defaults arising from 1 July 2022 to 31 December 2023. For defaults arising after 1 January 2024, the repo rate shall be 6.75%, the default interest 14.75%. 
• In December and January, the Ministry of Finance published several issues of the Financial Bulletin with the following content:
  • GFD Instruction-D-63 Determination of uniform exchange rates for the 2023 taxable period pursuant to Section 38 of Act No. 586/1992 Coll, on Income Taxes, as amended until 31 December 2023
  • notice on the treaty between the Czech Republic and the United Mexican States for the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes in connection with the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS 
  • notice on the treaty between the Czech Republic and the Republic of Armenia for the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes in connection with the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS 
  • tax deadlines (tax calendar) for 2024
  • changes to the Czech Accounting Standards for entities maintaining accounting records according to Decree No. 500/2002 Coll., 501/2002 Coll., 502/2002 Coll. and 504/2002 Coll. as of 1 January 2024
  • correct payment of tax to the customs authority
  • overview of types of taxes and parts thereof for which the tax authorities maintain personal tax accounts, to whose respective bank accounts payments from taxable entities are received (information obligation of the Ministry of Finance pursuant to Section 149(3) of Act No. 280/2009 Coll., the Tax Procedure Code, as amended)
  • correct payment of tax to the tax authority in 2024, including appendices.
• The Ministry of Industry and Trade has resolved the comments raised on an amendment to the Energy Act entitled LEX RES III and has submitted it to the government’s legislative council for approval. This amendment focuses on the modernisation of the electricity sector and includes major changes for electricity storage, aggregation, and flexibility. The amendment will also better protect customers.
• The concept of taxpayers' cash offices has been abolished effective from 1 January 2024. The rights and obligations that had been until now fulfilled by the taxpayer's cash offices has thus been transferred to their founders who will fulfil their obligations for the 2024 taxable period in their own name and with their own tax identification numbers. This measure will increase the effectiveness of oversight over tax compliance and reduce the unnecessary administrative burden for both taxpayers and tax authorities.
• An amendment to the Valuation Decree has been published in the Collection of Laws, and the Ministry of Finance published a land price map effective from 1 January 2024.

FOREIGN NEWS

• The European Commission has announced that five countries (Slovakia, Lithuania, Latvia, Estonia, Malta) have decided to postpone the application of the EU directive on minimum global tax on the grounds that there are no more than twelve ultimate parent entities of groups covered by the directive.
• The OECD Inclusive Framework envisages the completion of a multilateral agreement on Pillar 1 (reallocation of taxing rights to market countries) in March 2024 and its signing by the member states by the end of June 2024.