Tax liberation package waives selected prepayments

The tax liberation package in form of a decision of the Minister of Finance, published in Financial Bulletin 22/2020, only applies to taxpayers whose major part of income generated in the period from 1 June 2020 to 30 September 2020 derives from one or more activities that are banned or restricted effective from 14 October 2020 as a result of Government Resolution No. 1021 of 12 October 2020. These involve activities such as the operation of restaurant facilities and bars; organisation of concerts and other musical, theatrical and film performances; organisation of congresses and other educational events; organisation of trade fairs; and the performance of other similar activities explicitly stated in the government resolution. Taxpayers fulfilling these conditions are entitled to claim a waiver of:

• default interest relating to VAT for the September 2020, October 2020 and November 2020 taxable periods or VAT for the third quarter of 2020 taxable period, if the VAT to which default interest relates is paid no later than on 31 December 2020
• road tax prepayments for the 2020 taxable period payable on 15 April 2020, 15 July 2020, 15 October 2020 and 15 December 2020
• income tax prepayments payable in the period from 15 October 2020 to 15 December 2020.

To claim the waiver, the taxpayer must notify the appropriate tax authority that the major part of their income in the relevant period derived from the activities stipulated in the government resolution. Waivers concerning VAT do not cover the late filing of a tax return: both VAT returns and VAT ledger statements still have to be filed within the statutory deadlines. Waivers concerning road tax and income tax prepayments do not waive the tax itself. The statement of grounds for the minister’s decision points out that to the extent not covered by the decision, taxpayers may still apply for tax deferment or payment in instalments for reasons associated with the spread of SARS-CoV-2. If granted, default interest and interest on the deferred amount arising between 12 March 2020 and 31 December 2020 are automatically waived (see Financial Bulletin 9/2020).

On a general basis, the decision waives VAT on the gratuitous delivery of selected goods and services for which the duty to declare VAT arose in the period from 1 October 2020 to 31 December 2020. These involve mainly the following:

• gratuitous delivery of goods (protective tools, testing kits, etc.) or goods intended for their production
• gratuitous delivery of goods to produce disinfectants or gratuitous delivery of disinfectants 
• gratuitous delivery of goods and services to health professionals
• gratuitous delivery of goods and services to the Integrated Rescue System, Czech Armed Forces, or social services.