News in Brief, May 2024

DOMESTIC NEWS

• An amendment to Act No. 383/2012 Coll., on conditions for trading greenhouse gas emission allowances, has been published in the Collection of Laws under No. 80/2024, effective from 9 April 2024.
• On 1 May 2024, the Non-Performing Loans Market Act (84/2024 Coll.), the decree implementing the act (86/2024 Coll.) and the accompanying act (85/2024 Coll.) came into force. These laws implement EU directives and aim to create a single EU market with a portfolio of bank loans classified as 'non-performing' (loans that have not been repaid for a certain period of time or whose repayment is at risk). The Non-Performing Loans Market Act contains the public-law regulation of the administration of non-performing loans that has so far been subject only to general civil-law regulation.
• The Ministry of Labour and Social Affairs has announced the average gross annual wage in the Czech Republic for 2023 for the purposes of issuing blue cards under Act No. 326/1999 Coll., on the residence of foreign nationals in the Czech Republic (Notice No. 98/2024 Coll.).
• An amendment to the Act on Certain Measures against the Legalisation of the Proceeds of Crime and the Financing of Terrorism and a decree to that effect have been published in the Collection of Laws (107 and 108/2024 Coll.)
• The government has approved a draft act on digital finance, which aims to implement EU regulations such as the Digital Operational Resilience Act (DORA) and the Markets in Crypto-Assets (MiCA) Regulation. The draft includes a modified categorisation of offences as well as the powers of the CNB, which will license crypto-asset service providers, supervise compliance with established obligations and address potential breaches.
• The Government has approved the pension reform proposal submitted by the Ministry of Labour and Social Affairs. The reform includes, e.g., linking the retirement age to life expectancy, as well as a number of other important changes.
• From 1 April 2024, social enterprises can again apply to the National Development Bank for an interest-free loan of up to CZK 25 million under the S-Enterprise Plus programme. The Ministry of Labour and Social Affairs has allocated a total of CZK 270 million for their support.
• The New Zealand market is opening up more to Czech companies thanks to the EU-New Zealand Free Trade Agreement, which entered into force on 1 May. In addition to the removal of all tariffs on EU imports, the agreement simplifies the provision of services, introduces equal treatment in public procurement tenders, and removes barriers to digital trade.
• Community energy sharing will be launched in the second half of this year. The details are set out in the Electricity Metering Decree, which has undergone an inter-departmental comment procedure. To be able to share electricity in energy communities, households and businesses must have flowmeters installed.
• On 30 April, the Ministry of Justice announced a public consultation on the preparation of a new Action Plan of the Czech Republic - Open Government Partnership for 2025 and 2026.  The intention is to gather proposals that fulfil the principles of open government (transparency, accountability for one’s actions and public involvement in decision-making processes, providing meaningful feedback). Proposals can be submitted in writing no later than 28 May 2024 or presented at a public workshop on 14 May 2024.

FOREIGN NEWS
 

• In his opinion on the case of the Dutch taxpayer, the Advocate General has concluded that the tax deductibility of interest on loans between related parties can be challenged for the abuse of law even if the interest is at arm's length.
• The Advocate General has also dealt with a Swedish withholding tax on investments of Finnish public pension funds concluding that a restriction on the free movement of capital had been identified. The referring court has to verify (on the basis of the criteria set out in the Advocate General's opinion) whether a Finnish pension fund is objectively comparable to a Swedish public pension fund whose dividends are exempt from tax.
• The European Parliament had adopted its resolution on the proposal for a Council Directive on Transfer Pricing, which supports the Commission's original proposal but with some changes. The resolution does not recommend a dynamic reference to the current version of the OECD Transfer Pricing Guidelines. As a result, the directive retains the references to the 2022 OECD guidelines, with the Commission having the power to adopt amendments by means of Commission delegated acts. The resolution also proposes to re-launch the Joint Transfer Pricing Forum (JTPF) under the new name of the European Transfer Pricing Forum (ETPF), to be chaired by the European Commission, which should contribute to maintaining a uniform methodology across the EU. The European Parliament proposes an effective date as early as 2025, with member states having until 31 December 2024 to implement the regulation. However, the resolutions adopted by the European Parliament are only of a recommendatory nature for the Council.
• On 25 April 2024, the OECD/G20 Inclusive Framework on BEPS issued a Consolidated Commentary on the Global Rules Against Base Erosion under Pillar 2. This commentary incorporates the various documents approved since the original commentary issued on 14 March 2022 and integrates them into the consolidated commentary. At the same time, an updated document with illustrative examples, originally issued on 14 March 2022, has also been published