News in Brief, March 2022
Last month’s tax and legal news in a few sentences.
1 March 2022 In brief
- In Financial Bulletin No. 4/2022 you will find:
- overview of the types of taxes and their parts on which personal tax accounts are kept by the authorities of the Czech Customs Administration as specified by Section 149(3) of Act No. 280/2009 Coll., the Tax Procedure Code, as amended
- list of the registry parts of the bank accounts of the customs offices.
- According to the Supreme Audit Office, road tax collection is an administratively demanding process with low efficiency: the state collects four times less for one crown it spends, compared to other taxes. According to the financial administration, the low tax collection efficiency is not caused by its administrative complexity but mainly by inﬂation and low tax rates. A road tax automation is currently being prepared within the new tax information system.
- The GFD has announced that the operation of the original tax information box (TIB) was discontinued on 28 February 2022. The service to view selected data will be available for a transitional period to allow sufficient time to log into a modernised tax information box (TIB Plus).
- The financial administration draws attention to the approaching deadline for submitting a notification of exempt income exceeding CZK 5 million to the relevant ﬁnancial authority.
- The Ministry of Finance has submitted for external comments a law that abolishes the electronic reporting of sales from 1 January 2023. Until 31 December 2022, the duty to report sales electronically is suspended by already approved amendments.
- Double taxation treaties with Kosovo and San Marino are awaiting to be discussed in the chamber of deputies and the senate.
- The deputies' chamber will also discuss amendments to the Excise Duty Act and the Value Added Tax Act implementing EU legislation on alcohol and alcoholic beverage taxes, and regulations relating to joint defence efforts under the EU's Common Security and Defence Policy.
- The CJEU has ruled that the sanctions imposed by Spain for the failure to report assets held abroad are disproportionate, discriminatory, and restrict the free movement of capital since they may discourage Spanish tax residents from investing in other jurisdictions. For example, the Spanish tax authorities can assess additional tax liabilities without any time limits or impose fines for breaches of the obligation to report assets held abroad or for late filing of the relevant property-related returns of up to 150% of the value of the unreported assets. These fines are higher and disproportionate compared to those applicable in purely internal situations.
- The European Commission has published a revised version of its work programme for 2022. The most important legislative initiatives in the tax area include an amendment of the Tobacco Taxation Directive, a directive concerning the general arrangements for excise duty, a proposal to implement the OECD agreement to amend taxing rights within the EU (Pillar 1) and a proposal to introduce a debt equity bias reduction allowance (DEBRA).
- The German Federal Ministry of Finance has issued a draft bill to implement tax relief measures for coping with the coronavirus crisis. Key tax measures include:
- Fixed assets acquired in 2022 (currently only in 2020 and 2021) can be depreciated by up to two and a half times the depreciation on a straight-line basis but limited to 25%.
- The option to carry-back losses shall be extended from one to two preceding taxable periods: a loss carry-back would thus be possible in both years directly preceding the year in which a loss was incurred.
- The maximum amount of a loss carry-back has been increased from EUR 1 million to EUR 10 million for 2023 as well (currently only available for 2021 and 2022).
- Deadlines for filing tax returns for the 2020, 2021, and 2022 taxable periods for which the filing deadline has not yet passed will be extended by up to four months.
- The OECD has published its proposals for the first rules for the reallocation of taxing rights of companies with a turnover exceeding EUR 20 billion and profitability of 10%. A full 25% of profits above this 10% threshold will now be allocated to countries where goods are sold or services consumed (Pillar 1). Under the proposals, all corporate group’s income will be allocated using allocation mechanisms between the jurisdictions of sale or consumption in which such income will be subject to taxation. The proposals contain rules for determining the source of income in seven different areas (goods, components, services, intangible rights, real estate, government subsidies, and other revenue). The income to be taxed in the countries of consumption and the tax base will be determined based on the consolidated financial statements of the entire corporate group. Both documents take the form of a legislative proposal and are open to public comments.
- On 24 February 2022, the EU Council added the Bahamas, Belize, Bermuda, the British Virgin Islands, Israel, Montserrat, the Russian Federation, Tunisia, the Turks and Caicos Islands, and Vietnam to the list of countries whose tax systems are being monitored by the EU for their commitment to comply with EU standards (grey list). The Council made no changes to the list of non-cooperative jurisdictions.