News in Brief, January 2025

DOMESTIC NEWS

• An amendment to the Value Added Tax Act has been published in the Collection of Laws under No. 461/2024 Coll.
   
• An amendment to the Excise Duty Act has been published in the Collection of Laws under No. 462/2024 Coll.
   
• The amendment to the Employment Act and other laws abolishing the notified agreement regime and introducing a special limit for the exemption of health-related employee benefits has been published in the Collection of Laws under No. 470/2024 Coll.
   
• The chamber of deputies has approved an amendment to the Income Tax Act (as part of the amendment to the laws on the digitisation of the financial market – regulation of crypto-currencies), which introduces an exemption from personal income tax for income from the sale of crypto-currencies in a similar way as for income from the sale of securities. The amendment will be discussed by the senate at its session on 22 January 2025.
   
• The chamber of deputies has approved an amendment to the Act on Tax Measures in Connection with Support for Ukraine, which extends the effectiveness of these measures for the 2024, 2025, and 2026 taxable periods. The amendment will now be discussed by the senate.
   
• The chamber of deputies has approved an amendment to the Income Tax Act (as part of the amendment to the Energy Act), which abolishes the special straight-line depreciation of photovoltaic power plants over 240 months. Assets that were subject to this regime will be depreciated according to their classification in the relevant depreciation group. The amendment will now be discussed by the senate.
   
• The chamber of deputies has approved an amendment to the Income Tax Act (as part of the amendment to the regulations on child care services in children’s groups), which restores the taxation for employee stock option plans back to the pre-2024 regime (taxation on an acquisition basis) while also allowing for the postponement of the taxation of this income under the rules in effect from 2024 provided that the employer informs the tax authorities of that. The amendment also makes the rules of tax support for the long-term investment product more flexible (adding up savings periods upon the change of the provider of the tax-supported long-term investment product).
   
• The Czech Social Security Administration has prepared a technical solution for the digitisation of other sickness insurance benefits brought about by the legal changes published in the Collection of Laws on 16 December 2024. All is ready for launch on 1 January 2025. Changes to the processing of benefits take effect in the new year but the CSSA will allow doctors, healthcare facilities, and employers to adapt to the new solution gradually to have enough time to set up the necessary software.
   
• Excise duty rates on cigarettes and selected tobacco products have increased by 5% from 1 January 2025, and will continue to increase at the same pace also in 2026 and 2027. Between 2025 and 2027, excise duty rates on heated tobacco will also increase, at a pace of 15% per annum.
   
• A list of countries for whom the principle of reciprocity for the refund of VAT to a foreign person pursuant to Section 83 of Act No.235/2004 Coll., on Value Added Tax, as amended with effect from 1 January 2025, has been fulfilled with effect from 1 January 2025 has been published in Financial Bulletin 21/2024. 
   
• A notice on the treaty between the Czech Republic and Ukraine and a notice on the treaty between the Czech Republic and the Socialist Republic of Vietnam 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 have been published in Financial Bulletin 20/2024.
   
• ‘An 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) and the 'How to correctly pay tax to the tax authority in 2025, including appendices' guide have been published in Financial Bulletin 19/2024.
   
• A notice on the treaty between the Czech Republic and Thailand for the avoidance of double taxation and the prevention of tax evasion in the field of income taxes and a notice on the treaty between the Czechoslovak Socialist Republic and the Republic of Tunisia in connection with the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS have been published in Financial Bulletin 18/2024.

FOREIGN NEWS

• The effectiveness of the EU Deforestation Regulation has been postponed for a year, so the new rules will not apply to large enterprises earlier than from 30 December 2025 and to small and micro enterprises from 30 June 2026. Although this has given businesses a little more time, we recommend not to delay in preparing for this regulation given the number of upcoming obligations.
   
• KPMG’s EU Tax Center has prepared a summary of EU legislation on direct taxes that has recently been adopted (Pillar 2, public CbCR) or is in various stages of preparation. As the Polish EU Presidency's programme shows, the highest priority among forthcoming legislation will be an amendment to the Directive on Administrative Cooperation in the Field of Taxation (DAC 9), which regulates the exchange of information within the EU for Pillar 2 purposes. As regards indirect taxes, the Polish EU Presidency will focus on reducing the VAT collection gap, in particular by tightening e-commerce rules. Priority will be given to combating irregularities in the distance selling of goods via electronic interfaces.
   
• The FASTER (Faster and Safer Relief of Excess Withholding Taxes) Directive has been formally approved by the EU Council. Member states will be required to transpose the rules into their legislations by 31 December 2028, with the directive expected to take effect from 1 January 2030.
   
• The Implementing Regulation laying down a uniform template and electronic formats for reporting under the EU Public CbCR Directive has been published in the Official Journal of the EU.
   

Developments in Pillar 2 (minimum taxation)

• Poland has approved the rules for minimum taxation under the EU directive. The law came into effect on 31 December 2024, with the possibility of earlier application from 1 January 2024.
   
• Slovakia has adopted changes to its minimum tax rules, including the introduction of a permanent safe harbour for minor entities and adjustments to the transitional CbCR safe harbour.
   
• France has introduced new reporting obligations for Pillar 2, which include detailed reporting under the GloBE Information Return and an enhanced information obligation in tax returns.
   
• Germany has opened a comment procedure on the minimum tax bill. The bill includes changes to the implementation of transitional safe harbours under the OECD guidelines and rules for hybrid arrangements.
   
• Hungary has adopted legislative changes for Pillar 2 and has published the final registration form. It introduces advance payments for domestic minimum tax, which must be declared by the 20th day of the 11th month following the end of the taxable period. The deadline for Hungarian constituent entities to comply with the registration obligation is 12 months from the beginning of the taxable period in question (31 December 2024 for the 2024 calendar year).
   
• KPMG’s EU Tax Center regularly summarises changes in direct taxes in the EU and internationally that may affect your business. You can read up on important case law and new legislation at OECD, EU, and individual member state levels. The complete latest edition of 20 November.