Latest News, June 2019

HOME NEWS IN BRIEF

• The Government approved the ‘rate package’ regulating the taxation of tobacco products, spirits and gambling effective 1 January 2020. The package also changes the method of calculating insurers’ technical provisions to provide more objective criteria for tax purposes. Beyond the scope of what was originally proposed, the amendment stipulates the taxation of interest income from ‘crown bonds’ issued before 1 January 2013, exempts certain landscape elements (such as groves) that may help to fight draught from tax, and increases the administrative fees for entering ownership titles in the real estate register.
   
• Various forms of sector tax are being discussed, including, for instance, a progressive tax on assets of up to 0.3% for assets exceeding CZK 300 billion, or a contribution to the National Development Fund in a so far unspecified amount.
   
• For external comments, the Ministry of Finance has released a proposed amendment to the ‘valuation decree’, responding, among other things, to the long-term problems of forest owners struggling with the bark beetle and going hand in hand with the government’s other measures to fight the bark beetle calamity.
   
• On its website, the General Financial Directorate has published information for taxpayers on filing the notice under Section 38da of the Income Tax Act.
   
• For external comments, the Ministry of Finance has released a bill transposing Council Directive (EU) 2017/1852 of 10 October 2017. The bill concerns tax dispute resolution mechanisms in the European Union (DRM), and regulates relations with other states with whom double tax treaties have been concluded.
   

WORLD NEWS IN BRIEF

• Apart from digital taxation and changes to the black list, covered in a separate article, ECOFIN also dealt with legislative proposals on excise duties. The directive on an excise duty on alcohol, intended to introduce to the EU legislation the possibility of exempt home distillation, did not pass. According to the Ministry of Finance, the Czech Republic did not support the proposal. Following that, a directive stipulating general rules of excise duties also did not pass.
   
• Through a referendum, Switzerland adopted a tax reform to transform its tax system so that the country would not be put on the EU black list of non-cooperating tax jurisdictions. Currently, the country is on a grey list. The changes are to enter into effect in January 2020.
   
• The Czech Ministry of Finance published information on reclaiming Austrian withholding tax in the context of the double tax treaty between the Czech Republic and Austria. It says that Austria has introduced a web-based procedure for reclaiming withholding tax, which also applies to refunds of tax collected contrary to the double tax treaty between the two countries.
   
• The French senate has passed a law introducing a 3% tax on income from digital services. The law limits the application of the tax to fiscal years 2019, 2020, and 2021, on the assumption that by the end of 2021 at the latest, consensus will be reached at the EU or OECD level.
   
• Upwards of 129 OECD/G20 member states including the BEPS platform have adopted the Programme of Work containing steps to develop a consensus solution to the taxation of multinational corporations. The document will be presented at the meeting of the G20 finance ministers on 8 June in Japan. It contains two pillars: the first pillar deals with the nexus, i.e. where and on what base the tax should be paid; the second pillar deals with designing a system for the taxation of multinational enterprises operating in the digital economy.