Brief overview of tax relief
08 April 2020
The following tax breaks issued by the Ministry of Finance of the Czech Republic and the Parliament of the Czech Republic to date pursue a single objective: to support the cash flow of taxpayers. In the following I will try to systematically recapitulate them. In addition to these measures, in order to remove the harshness of penalties resulting from late payment or late filing of the return/control statement, you can make use of, for example, requests for remission or delay. According to the public promise of the Minister of Finance, the tax authorities will respond to these requests of crisis-affected entities.
- Withdrawal period for submission of income tax returns without penalty until 1 July 2020
- First, I would point out that this measure concerns only personal and corporate income tax returns. In no case does the measure affect either value added tax returns or the charging of income tax on dependent activity withholding in the form of an advance.
- In case the tax return is filed and the tax paid by 1 July 2020, the tax subjects will not be obliged to pay interest on late payment and a penalty for late filing of the tax return.
- In view of this measure, self-employed persons will be able to submit the tax return by 3 August 2020.
- Remission of the June advance on personal and corporate income tax
- Applies only to entities with a tax period of the calendar year.
- The taxpayer will not have to pay the deposit at all.
- Entrepreneurs with a business year may apply for an income tax advance payment by individual application.
- Possibility of applying the loss for 2020 retroactively in 2018 and 2019
- All entities that end up in a loss for the 2020 taxation period will be allowed to apply this loss retroactively in the 2018 and 2019 results (in the form of an additional tax return for the relevant periods).
- In practice, this will mean that businesses which posted taxable profits in 2018 and 2019 will receive part of this tax.
Value added tax
- VAT payers who supply, free of charge, protective equipment or the material used to produce such equipment are not required to pay VAT on that supply.
- This applies both where the VAT payer donates protective means directly to the final customer or where the VAT payer supplies the material used for the production of these funds to another VAT payer.
- The waiver of VAT applies to masks, respirators and other protective equipment, as well as test kits or instruments and tools used to diagnose COVID-19. The list of this equipment is explicitly defined in the Decision of the Minister of Finance of the Czech Republic and published in the Financial Bulletin 6/2020.
- The measure will apply from 12 March 2020 for the entire duration of the emergency.
- The right to deduct will remain.
- Remission of the fine for late submission of the VAT return
- Businesses that were at least partially remitted a fine for failure to submit a control statement pursuant to Section 101h (1) (a) (b) (c) or (d), i.e. fines of CZK 10,000, 30,000 or 50,000, the penalty for late submission of the VAT return will be automatically waived for the period that fully or partially coincides with the period for which the respective control statement was late.
- The waiver is conditional on filing a VAT return no later than on the day of filing the VAT control statement.
- The measure is aimed at those cases where, because of the epidemic, VAT payers are not able to process and file their tax returns and control statements on time.
- The remission does not concern late interest for late payment of VAT. The waiver must be requested individually.
- At the same time, the penalty for late submission of VAT returns is automatically waived if the tax administrator has even partially complied with the application for remission of late interest related to the late payment of this VAT. The fine will not be waived without applying for interest remission.
- Waiver of fine for late submission of control statement
- Up to the value of CZK 1,000, the fine will be automatically waived if it arose between 1 March and 31 July 2020.
- Other fines (CZK 10,000 to CZK 50,000) will be waived at the taxpayer's individual request. Again, it can be assumed from the statement of the Ministry of Finance of the Czech Republic that the tax administrator will comply with the requests in cases related to the coronavirus pandemic.
- Suspension of the obligation to record sales electronically
- Applies to entities covered by all stages of the EET.
- The suspension of records will apply for the emergency period and the following three months.
Waiver of tax accessories
- A friendly approach by tax administrators to applications for tax remission or tax delays and its accessories
- As I mentioned in the introduction, tax administrators will consider requests more openly than usual. However, it will be up to the taxpayer to show the negative impact of emergency measures on its business. If successful, the tax administrator should grant the request.
- Waiver of penalties for late payment of tax
- It concerns the remission of interest on late payment or interest on the amount retained.
- If a link between the pandemic and the late payment of the tax liability is established, both types of interest will be fully waived. For waiver, an official application must be made to the relevant tax authority.
- Waiver of administrative fees for waiver requests, stay requests and other requests
- All applications for waiver of tax accessories, as well as applications for postponement filed by 31 July 2020 will not be subject to an administrative fee (amounts of CZK 400 and CZK 1,000)
- Taxpayers will thus be able to apply completely free of charge.
- Similarly, no fee will be payable on the application for refund of import taxes or remission of the customs outstanding balance pursuant to Article 116 of Regulation (EU) No 952/2013 of the European Parliament and of the Council, also in respect of an application for authorisation of a tax relief or duty pursuant to Articles 110 and 112 of the Union Customs Code. For both applications, the fee will be waived if submitted by 31 July 2020.
- Advances on road tax due by 15 April 2020 and 15 July 2020 can be paid without penalty until 15 October 2020
- In fact, the deadline for payment of two advances on road tax (due until 15 April 2020 and 15 July 2020) has been postponed without penalty in the form of default interest
- The condition is that both advances should be paid no later than 15 October 2020. If the taxpayer pays the advances after that date, the automatic remission of default interest will not apply. Default interest will be incurred retroactively from 15 April or 15 July 2020.
Real estate acquisition tax
- Exemption from fines for late tax return for real estate acquisition tax or for late tax payment
- Applies to all real estate acquisition tax returns from 31 March to 31 July 2020.
- It will be possible to file a tax return without penalty until 31 August 2020.
- If the real estate tax is also paid by 31 August 2020, the interest on late payment will be waived. In practice, this will mean paying the tax with a delay of several months.