Amendment to the tax code

The amendment to the tax code came into effect on 1 January 2021. Based on the justification report for the act, the following thematic areas should constitute the core of the proposed changes:

1. support of digitalisation
2. simplification of inspection procedures
3. revision of the sanctioning system
4. refund of the tax deduction.

Below we take a brief look at the most interesting changes in the individual areas.

Support of digitalisation

The MY Taxes portal should give taxpayers not only the option of electronic communication with the tax administrator, but also an overview of their tax duties.

In order to motivate taxpayers to use the new electronic communication system, those who file their tax returns electronically can enjoy a 1-month extension of the deadline for filing their annual tax return.

Simplification of inspection procedures

Tax inspections can now be initiated and concluded via correspondence, and not only in person as was the case to date.

Revision of the sanctioning system

The amendment has completely revised the provisions on interest. The following changes have been made:

• Reduction of default interest from the original repo rate + 14 percentage points to the repo rate + 8 percentage points.
• Reduction of deferral interest to ½ of the default interest.
• Reduction of interest from the refundable overpayment from the original repo rate + 14 percentage points to the repo rate + 8 percentage points.
• Interest from incorrectly stipulated tax newly corresponds to the default interest.
• Interest from the tax deduction is changed from the repo rate + 2 percentage points to ½ of the default interest.

The amendment shortens to tolerance deadline from 5 days to 3, meaning that default interest will be counted from the fourth day after the original maturity deadline for tax until the date of its payment. However, the amendment also increases the minimum amount for accrual of default interest, from CZK 200 to CZK 1,000.

The amendment introduces the option of individual pardoning of the penalty for late tax claims, which was not previously possible.

Advance on excess deductions

The amendment introduces the institute of an advance on excess VAT deductions. This shall be used if the financial bureau has doubts with respect to only a part of the deduction. The undisputed part of the excess deduction can be paid in the form of an advance, if it is more than CZK 50,000.

The deadline for refunding the excess deduction remains at 30 days.

Please do not hesitate to contact us if anything is unclear or if you have any further questions. 

The WTS Alfery Team