Main tax and accounting changes 2023

My colleagues have prepared for you the main news from the field of VAT and income tax for 2023 in the following articles of this edition of the newsletter. I will try to briefly and appropriately follow up on my colleagues' work with a discussion of other changes that the legislators have prepared for us in taxes, accounting and related regulations for 2023.

Amendment to the Electronic Acts Act - data boxes (DS)

• The obligation to use DS is extended to other legal entities registered in the register - associations, foundations, institutes, unit owners associations, commercial and public benefit companies. These persons (e.g. unit owners associations, societies) can expect an envelope with access data to the data box by the end of March 2023.
• The same fate as in the previous point also fell on natural persons doing business. At the last moment, non-business owners who log in to the "virtual" environment to prove their identity (with a bank identity, electronic ID card, etc.) have escaped the obligation to use data boxes.
• The amendment to the Tax Code has rather clearly prepared and stated that the obligation to file tax returns electronically will be avoided for individuals who are not business owners.

Electronic sales registration (EET)

• It was exciting, but in the last days of 2022, the obligation to electronically record sales from 2023 was approved and thus ended. This obligation was suspended until the end of 2022 due to the Covid pandemic.

Increase in excise duty on tobacco products

• In January 2023, all excise duty rates on tobacco products and heated tobacco products were increased by 5% and identically.

Significant renewal of the road tax

• The amendment to the road tax introduced ground-breaking changes in 2022, but the bulk of the changes will be reflected in real terms in the tax return filed on 31 January 2023.
• Just as a reminder, the road tax on cars, buses and trucks up to 12 tonnes has been abolished completely. Trucks are defined as N2 and N3 and their trailers as O3 and O4, if registered in the Czech Republic.

Amendment to the Act on Significant Market Power

• The amendment implements the EU Directive on unfair commercial practices between undertakings in the agricultural and food supply chain.
• After the amendment, any customer in the whole chain will have market power if its turnover exceeds EUR 2 million (previously CZK 5 billion - which was met by about 10 retail chains) and at the same time exceeds the turnover of the supplier.

Tax grace summer

• It should last from 1 July 2023 to 30 November 2023.
• It is likely to relate to debts up to September 2022.
• The range of persons and types of arrears will hopefully be specified and legislated in the first months of this year.
• The new amnesty will probably also apply to the Czech Social Security Administration, for example, and perhaps some other state institutions will join in.

Amendment to the Act on International Cooperation in Tax Administration - DAC7

• A new reporting obligation is introduced for platform operators on reportable activities carried out by reporting vendors through these platforms.
• It refers to activities - provision of immovable property, provision of means of transport, sale of goods and personal services (legal, accounting or management consultancy).
• The Directive is effective from 2023 and the first reporting will have to be done by the end of January 2024.

Amendment to the Energy Act and the Building Act

• At the end of 2022, the Chamber of Deputies approved changes to these regulations concerning the construction of renewable energy sources up to 50 kilowatts (kW), whereby no permission from the building authority or a licence from the Energy Regulatory Office (ERO) will be required. The approval of this change in the rest of the legislative process is also expected to go smoothly.

Increase in premium rates for paramedics and company firefighters

• Measures related to the early retirement of these groups. This will allow employers to participate in the financing of the retirement of these early retirees.
• Pension increases will be gradual. The first year by 2%, the second by 3%, the third by 4% and the fourth by a final 5%.

Part-time insurance discount

• From February 2023, employers will be able to take advantage of the social insurance discount if they employ workers who are under 21, over 55, care for a child under 10, are disabled or have recently completed retraining.
• The discount will be available for employees who work between 8 and 30 hours per week and will be deducted from the employer's social security contributions at a rate of 5% of the employee's assessment base.

Minimum wage change

• From January 2023, the minimum wage will increase to CZK 17,300.
• Check wherever this change may affect you. For example, it could be the threshold for the exempt pension, which will be CZK 51,900 per month for 2023.
• This modification will change the amount of the tax credit for the placement of a child in a preschool. For the year 2023, the amount will be CZK 17,300 (for the year 2022, however, you will still have to make an annual settlement or tax return and you will still apply a maximum of CZK 16,200).

E-shop must not forget to prepare for the so-called "button" amendment

• The amendment affects the entire purchasing process by imposing various information obligations, from variations in the wording of the buttons used to place an order, right up to the sending of the confirmation of the contract.
• If the e-shop wants to avoid invalidating the contract, it must clearly state "Order binding payment" on the button.

Change in the meal allowance from January 2023 by decree of the Ministry of Labour and Social Affairs

• Update your meal allowance rates from January 2023 according to Decree No. 467/2022 Coll.
• As an example, the rate of basic compensation for a personal vehicle has increased from the original CZK 4.7 per km to CZK 5.2 per km. Also, where you already use electric cars, do not forget about the option to use the average price. This is CZK 6/kWh.

Levy on excess revenue of electricity producers

• An amendment to the Energy Act was approved at the end of November 2022, which introduced an excess revenue levy for electricity generators.
• The change is effective as of 1 December 2022.
• The payers of the levy are the producers and any intermediaries participating in the wholesale electricity markets on behalf of the producers.
• The subject of the levy is the producer's excess income, which is determined as the difference between the income actually realised and the market income ceiling. However, the law excludes from the subject matter a range of income from the sale of electricity, and we encourage potential payers of this levy to review the regulation in more detail or to contact us.

For example, what can we expect in the coming months of 2023 or early 2024?

• A new law on accounting is being prepared, which has already been written and is expected to go through the legislative process of approval in 2023, with the plan to take effect in 2024. Hand in hand with this law there will be, for example, a complete change of all related decrees.
• In 2023, legislative work on the Labour Code is expected to take place to regulate work from home. Here it is necessary to finally establish certain boundaries, which have been completely lacking up to now. For example, a certain lump sum is being prepared which the employee would receive from the employer for the use of private premises, which should be tax-deductible and exempt for the employee. Furthermore, while the employer may order work from home in specific situations, the employee may also be able to request the employer to permit work from home in certain situations, with the employer having to explain its refusal in writing. The exact criteria are still being discussed at the government level.
• An amendment to the Investment Incentives Act is being prepared that should, among other things, abolish the obligation to submit every application for an investment incentive to the government for consideration. The Ministry of Industry and Trade should be able to decide again. The pre-2019 situation will return (strategic investments will remain with the government). This is due to the considerable lengthening of the investment incentive decision-making process. The approval time for the investment incentive has been extended to 9 to 12 months from the original three to five months. Perhaps as an aside, the necessity of this change is demonstrated by the fact that 27 incentives were granted in 2020, only 14 in 2021 and only one in 2022.
• We all must get acquainted in detail with what was or was not left out at the last moment in the new instruction D - 59, which replaced instruction D - 22 regulating a uniform procedure for the application of certain provisions of the Income Tax Act. The instruction was only published in the last days of 2022, when the General Financial Directorate published it on its website, and it took effect on 1 January 2023.