Liberating Package III
Before you set out for a well-deserved leave, we would like to inform you about recent developments of tax reliefs adopted in connection with the Covid-19 pandemic.
The Government adopted a liberating package as a follow-up to the earlier tax relief measures, extending their application. Particularly, remission of tax, tax penalties and other charges and administrative fees is concerned.
The measures include, in particular:
- Actual postponement of the deadline for submission of the income tax return and payment of tax for both legal entities and individuals until 18 August 2020, with the exception of taxpayers falling within the competence of the Specialized Tax Office (remission of late submission and late payment penalties).
- Actual postponement of the deadline for notification of tax-exempt income for individuals until 18 August 2020 (remission of penalties related to late submissions).
- Actual postponement of the deadline for submission and payment of real estate acquisition tax until the end of 2020 (remission of late submission and late payment penalties). Considering the prepared abolition of this tax with retrospective effect from 2020, this tax will probably not be paid at all.
- Remission of VAT on gratuitous supplies of basic protective equipment (face masks, respirators, disinfectants, etc.) that became subject to taxation between 18 May 2020 and 31 July 2020.
- Automatic remission of late payment interest and interest on deferred payments incurred between 12 March 2020 and 31 December 2020 in cases where the tax administration permitted, on a case-by-case basis, deferral or payment in instalments for reasons linked to Covid-19.
- Remission of administrative fees for requests submitted to a Tax Office or Customs Office by the end of 2020 (request for tax deferral or request for payment in instalments, request for remission of late payment interest, request for remission of penalties for failure to submit control statements, etc.)
- Remission of penalties for late submission of employer’s statements (payroll tax) if submitted on or before 31 May 2020.
Anti-Crisis Tax Package
On 30 June 2020, an anti-crisis package was published in the Collection of Laws of the Czech Republic, taking effect on 1 July 2020. Please find below the tax relief measures for entrepreneurs and companies the package has introduced.
A significant part of the anti-crisis package is the loss carryback we addressed in our News 5/2020 .Henceforth, both individuals and legal entities are free to amortize their losses incurred in two previous tax years.
Please note that the deadline for tax assessment for the tax years in which the tax base was reduced by the tax loss shall be extended in the case of loss carryback.
Application of reduced VAT rate to selected services
According to the anti-crisis package, selected services subject to the first reduced VAT rate (15 %) shall be shifted to the second reduced VAT rate (10 %). These include:
- Provision of accommodation services;
- Admissions to sports and cultural events, museums, botanical and zoological gardens, natural reserves and national parks;
- Use of sports facilities for sporting purposes;
- Hammam and sauna services and selected similar facilities;
- Passenger transport by ski lifts.
The second reduced VAT rate can be used in the above listed cases as from 1 July 2020.
Road tax for trucks with a maximum permissible weight exceeding 3.5 tonnes shall be reduced by 25 %, with retroactive effect from the beginning of 2020. This measure will manifest itself in retroactive reduction of advance payments of tax to be paid in 2020.
If taxpayers did not used the “general pardon” to defer the obligation to pay road tax advances, paying the advance in the original amount, the difference between the old and new amount shall be used to pay the remaining advances in 2020.
Extended possibility of exemption from real estate tax
Up to now, municipalities were free to exempt only that real estate from real estate tax affected by natural disasters (such as flood, storm, extreme drought). Henceforth, exemption is also allowed in the event of a pandemic, emergency measure under the Crisis Act, or industrial accidents.
This exemption can also be applied with retroactive effect. In fact, municipalities have to define the exempt real estate in generally binding ordinances effective until 31 March of the year following the tax year in which the emergency occurred. The exemption shall be applied in the form of an ordinary or additional tax return.
Should you have any further questions, please feel free to contact us anytime.
Your WTS Alfery team