Latest News, May 2019

HOME NEWS IN BRIEF

• Ministry of Labour and Social Affair Notice No. 103/2019, announcing the amount of 50% of the average monthly wage for the purpose of life and subsistence minimum, and the amount of 50% and 25% of the average monthly wage for the purpose of state social support was published in the Collection of Laws. The ministry also issued Notice No. 104/2019 on the average gross annual wage in the CR for 2018 for the purpose of issuing blue cards under the Foreigners’ Residence Act.
   
• The new Personal Data Processing Act incorporating EU regulations into Czech law was published in the Collection of Laws under No. 110/2019. A number of other laws were amended in connection with this, by Act No. 111/2019 Coll.
   
• On its website, the GFD draws attention to a paper of the Coordination Committee of the General Financial Directorate and the Chamber of Tax Advisors in the CR answering the question of how to calculate a (partial) tax base – income from employment for employees covered by foreign social security regulations within the EU/EEA and Switzerland, from 1 January 2019.
   
• The General Financial Directorate published on its website Amendment No. 1 to the General Financial Directorate Information on Registrations for Value Added Tax.
   
• Financial Bulletin No. 3/2019 published by the Ministry of Finance contains:
  • an overview of taxes and their parts for which personal tax accounts are maintained by the Customs Administration of the Czech Republic
  • a list of customs offices’ bank account numbers (without prefixes).
     
• The Chamber of Deputies passed to the third reading the governmental proposal for an amendment to the Act on Electronic Reporting of Sales (EET) regulating the launch of the third and fourth reporting phase and introducing the option for smallest entrepreneurs to report their sales off-line. The proposal also includes an amendment to the VAT Act reducing the VAT rate for water and sewerage, meals (catering) and professional services, as well as electronic books, newspapers and magazines, and similar printed materials provided electronically. The third reading is expected to take place in the first half of May.
   
• The planned amendment to the Investment Incentives Act passed through the second reading on 17 April. As expected, the bill in its present wording defines an investment project with higher added value and significantly strengthens the government’s role in approving the applications for investment incentives. Following the amendment, an enormous decrease in the number of supported investment projects and a significant decrease in the volume of granted investment incentives are to be expected. The Economic Committee discussed the changes proposed in the second reading on 2 May. According to preliminary information, the amendment should already be relevant to applicants starting in the summer or autumn of this year.
   
• Deputies submitted to the chamber a draft amendment to the Income Tax Act aiming to reduce citizens’ tax burden by increasing the annual tax relief for each taxpayer from the present CZK 24 840 to CZK 30 000. The expected loss in tax collection is CZK 18.5 billion. The deputies’ bill also introduces a limit for the tax exemption of income from the sale of securities upon meeting the ‘time test’: the maximum amount to be exempt would be CZK 20 million per year.
   
• A double taxation treaty with South Korea is awaiting its reading in the chamber; the senate has already agreed to the ratification. The same applies to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
• In April, the first reading of the Act on Prevention of Double Taxation in relation to Taiwan took place in the chamber.

WORLD NEWS IN BRIEF

• The deadline stipulated by the Treaty on European Union for the United Kingdom’s withdrawal from the EU was extended until 31 October 2019. Should the United Kingdom not arrange for the elections to the European Parliament and not ratify the withdrawal agreement by 22 May 2019, the validity of the extension shall terminate on 31 May 2019.
   
• Luxembourg has become yet another country that deposited with the depository (OECD) their ratification documents for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). From 1 August 2019, it will start to apply the adopted measures vis-à-vis other countries that have also ratified the MLI.
   
• The French parliament has passed the introduction of a 3% tax on digital services, while the Austrian government has approved a 5% tax on digital services for income from internet advertising, within the first part of the package on the taxation of the digital economy.