Top-up tax: simplification of information returns also confirmed for the Czech Republic
Based on the new OECD agreement on a common understanding among countries, it will be possible to utilize exemptions from the obligation to file an information return under the top-up tax framework in the Czech Republic as well. This has been confirmed in a press release by the Czech Financial Administration.
The financial administration’s press release responds in particular to the newly issued OECD Multilateral Competent Authority Agreement on the Exchange of GLoBE Information (see our previous article in Tax and Legal Update here) and confirms the possibility of utilising the exemption from filing information returns in the Czech Republic, provided that by 30 June 2026:
- The GIR (a full group-wide information return) for the 2024 calendar year reporting period is filed in a jurisdiction listed by the OECD (EU member states and certain other countries such as the UK, Switzerland, Canada or South Korea).
- The group’s entities in the Czech Republic report this fact to the Czech tax authority.
Provided that the above conditions are met, Czech constituent entities may therefore only file a notification of compliance with the exemption conditions in the Czech Republic instead of a simplified information return, which will significantly reduce their related administrative burden. At the same time, it will be necessary for the information contained in the central filing (the GIR) to be provided to the Czech Republic by 31 December 2026, in accordance with the relevant multilateral agreements. Otherwise, the Czech constituent entities will have to file a (simplified) information return in the Czech Republic. In this context, we would add that the Czech Republic is now on the updated list of states that have signed the agreement, which suggests that it will be ready for the fulfilment of this condition.
When to submit the notification
Given that the OECD agreement makes the application of the exemption conditional upon the submission of a notification by 30 June 2026, we recommend submitting the notification for the purposes of Czech top-up tax and allocated top-up tax within this deadline. This is despite the fact that the generally accepted deadline for submitting the information return for the 2024 calendar year reporting period in the Czech Republic is 1 July 2026.
Since the Czech Republic is among the participating jurisdictions to the agreement, the information return for the entire group can also be filed centrally through the Czech financial administration. The forms required for top-up tax purposes (the information return and the tax return) are specified in the relevant decree on forms. The dedicated section of the financial administration’s portal for the electronic filing of the information return—or, as the case may be, for submitting a notification of central filing in another country—is expected to become operational in the coming days.
The financial administration further states that the deadline for filing tax returns for the reporting period of the 2024 calendar year is 2 November 2026. Tax returns will need to be filed separately in relation to the Czech top-up and the allocated top-up tax (it will therefore be necessary to file two tax returns for the given period).
The press release also includes information regarding the special status of Cyprus, which is not a member of the OECD Inclusive Framework but has implemented the top-up tax rules. A recommendation from the European Commission is expected in the near future, advising all EU member states to temporarily treat Cyprus as having qualified status, thereby preventing the risk of double taxation on undertaxed income.