News in Brief, May 2025

Domestic Briefs

• The financial administration has issued information explaining the rules for setting the CZK 50,000 exemption limit for winnings, introduced from 2024. For lotteries and raffles, the limit shall be set separately for each prize, and the amount shall be subject to a 15% withholding tax applied directly by the payer of tax; for non-cash winnings, the grossing-up shall be applied when calculating the amount of the withholding tax. For other games, the taxpayer (the winner) first determines the annual difference between the total deposits and winnings, separately for each type of game for the year; if this difference exceeds CZK 50,000, the winner must tax the entire income in their tax return.
   
• The chamber of deputies has started debating the bill on single monthly employer reporting (in Czech Jednotné měsíční hlášení zaměstnavatelů or JMHZ) and related laws.
   
• The chamber of deputies has approved a bill amending certain laws in the field of tax administration and the competence of the Customs Administration of the Czech Republic, Act No. 16/1993 Coll., on Road Tax, as amended, and Act No. 69/2010 Coll., on the ownership of Prague-Ruzyně Airport. Its focus is the reform of the customs administration, although the bill also contains an amendment to the Tax Procedure Code unrelated to customs issues.
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• In April, the following notices and decrees were published in the Collection of Laws, among others:
  • Communication of the Ministry of Foreign Affairs on the negotiation of the Treaty between the Czech Republic and Montenegro on the avoidance of double taxation in the field of income taxes and on the prevention of tax evasion and tax avoidance (No. 94/2025). The treaty is effective as of 30 January 2025.
  • Communication of the Ministry of Labour and Social Affairs No. 96/2025 Coll. on the average gross annual wage in the Czech Republic for 2024 for the purposes of issuing blue cards pursuant to Act No. 326/1999 Coll., on the residence of foreigners in the territory of the Czech Republic.
  • Decree No. 118/2025 Coll., amending Decree No. 350/2021 Coll., on the implementation of certain provisions of the Act on Childcare Services in Children's Groups.
  • Amendment No. 119/2025 Coll., to the Czech Television Act and the Czech Radio Act. The amendment increases the licence fees with effect from 1 May. It brings two main changes for companies, abolishing the obligation for companies to pay fees for each device capable of reception and introducing lump-sum payments according to the number of employees.
  • Amendment to the Labour Code enters into force on 1 June under No. 120/2025.
  • Government Decree No. 122/2025 Coll. amending Government Decree No. 590/2006 Coll. establishing the scope and extent of other important personal obstacles to work.
     

International Briefs

• Council Directive (EU) 2025/872 of 14 April 2025 amending Directive 2011/16/EU on administrative cooperation in the field of taxation has been published in the EU Official Journal. The new directive (DAC6) provides for the framework for the exchange of top-up tax information returns and introduces a uniform format for this return. Member states should implement it by 31 December 2025.
   
• The OECD has published an updated central register of Pillar 2 top-up taxes. Guernsey and Spain have now been granted the qualifying jurisdiction status for the Income Inclusion Rule (IIR) and Domestic Minimum Top-Up Tax (DMTT). These jurisdictions also qualify as safe harbours under the Qualified DMTT (QDMTT).
   
• The OECD has published an update of the Investment Tax Incentives Database 2024, which provides an overview of 667 tax incentives in 70 economies around the world. The most common form of incentive is a tax exemption, followed by tax deductions (usually at the tax base level) and reduced tax rates. Tax credits are used less frequently, and only one of the 48 tax credits is refundable (refundability allows direct cash benefits when firms are unable to fully utilise tax benefits, for instance due to losses).
   
• The VAT Expert Group has discussed the main aspects of the modernisation of the VAT system in the EU and the challenges related to the implementation of the VAT in Digital Age (ViDA) Directive. It also presented a study containing recommendations for streamlining the current VAT framework and adapting it to future market needs. The group also discussed the impact of ViDA implementation on tourism, the provision of financial services and other services subject to special rules. Regarding the platform economy and single VAT registration, working papers were presented, including a proposed timetable. An amendment to the IOSS scheme to ensure the correct use and verification of IOSS identification numbers on importation was also discussed.
   
• The KPMG EU Tax Centre regularly monitors changes in direct taxes in the EU and internationally. For a complete overview of the latest news and the possibility to subscribe, please click here.