The spread of coronavirus and the implementation of preventive measures brings citizens and entrepreneurs into entirely new circumstances that are sometimes difficult to face. Therefore, we try our best to provide you with the current news affecting your tax liabilities, tax reliefs and payments.
Advance payments of social and health insurance contributions in the case of the self-employed
According to the law adopted on 25 March 2020, all self-employed people have been exempted from payments of the compulsory social and health insurance contributions for the period from March to August 2020. An advance payment for March which has already been paid shall automatically be considered to be the advance payment for September 2020.
The self-employed who are liable to the minimum advance payments (in the case of social security contributions amounting to CZK 2 544 for the principal activity or CZK 1 018 for secondary activity; in the case of health insurance contributions amounting to CZK 2 352) are fully exempted from the advance payment.
The self-employed who are liable to advance payments exceeding the minimum advance payments do not have to pay advances during this period either.
When filing the 2020 statement of revenues and expenditures, they pay additionally only the difference between the minimum advance payment and the actual amount of the advance payment to be paid from March to August.
Six times the amount of the minimum advance payment shall be remitted automatically by law. This is also the final remission which means that these advances shall never be paid. Despite this fact, the 6-month period from March to August 2020 will be included in the entrepreneurs’ retirement pension entitlement periods.
Personal and corporate income tax
On 24 March 2020, the Ministry of Finance announced the Liberating Package II under which the advance payment of income tax to be paid by natural and legal persons in June 2020 shall be remitted. It is not necessary to apply for the remission since it will be automatic.
However, the remission does not apply to the advance payment of income tax that was due on 15 March 2020. This advance payment may be reduced or set to zero only upon individual requests, giving reasons related to coronavirus pandemic. Currently, the request may be filed with retrospective effect, with no administrative fee being charged.
If the tax authority approves the request, it will refund the already paid advance. If you are interested, we will be happy to assist you in this matter.
Also, please note that according to the Liberating Package I, natural and legal persons may file their 2019 income tax returns by 1 July 2020, without facing penalties for late submission or late payment of tax. We informed you about this fact in our News 2/2020.
In this context, we add that the self-employed may also submit their statements of revenues and expenditures for the purpose of health and social insurance contributions by 3 August 2020 without penalty. If the self-employed pays the outstanding amount of social security contributions by this date, they will be exempted from the penalties otherwise due in the case of late payment. The outstanding amount of health insurance contributions must be paid within 8 days from filing the statement in order to avoid a penalty for late payment.
Loss carryback of 2020
The Liberating Package II has brought about a new institute “loss carryback“, enabling both natural and legal persons to retroactively apply their 2020 tax losses to the 2018 and 2019 tax returns.
Taxable persons and entities shall apply a loss carryback in their additional tax returns by setting off the 2020 loss against the positive tax bases of 2018 and 2019. The tax authority refunds the excess income tax.
This measure can be applied after the 2020 tax return showing a tax loss is filed, i.e. not before the beginning of 2021.
Postponement of the electronic sales records (EET)
By the Liberating Package II, the Government has temporarily cancelled the obligation to keep electronic records imposed on entrepreneurs in all phases of electronic sales records. The measure shall apply during the state of emergency and the following three months.
The third and fourth phases of electronic sales records should be launched on 1 May 2020, applying to all remaining professions. The obligation shall be postponed.
From March 2020 to the expiry of the emergency measures taken in connection with the coronavirus pandemic, the eligibility conditions for care allowance shall be changed.
Parents of children under 13 years are eligible for care allowance. However, care allowance shall also be granted in the case of care of older disabled children who attend school. Furthermore, people who care for an older disabled person sharing a household with them due to closure of certain social care establishments (day care centres etc.) are entitled to care allowance. Henceforth, not only employees but also self-employed people will receive care allowance.
Henceforth, two carers may take turns in caring, even several consecutive times. Care allowance shall be paid in arrears as from the date of adoption of the emergency measures. Care allowance shall be granted for the entire duration of emergency measures (even retrospectively), being paid for the previous calendar month.
A certificate issued by the relevant establishment must be obtained to prove the entitlement to care allowance. The carer shall sign this certificate and deliver it to the employer. After the end of each calendar month, the carer shall fill in the statement of care of child due to a closure of the educational institution (Výkaz péče o dítě z důvodu uzavření výchovného zařízení), stating days on which the carer took care of the child or the disabled person. After adding to the form further decisive events, the employer shall send it to the relevant Social Security Administration.
The employees may send a scan or a picture of the forms and certificates per e-mail.
The self-employed shall be subject to rules similar to those applicable to employees. Allowance amounting to CZK 424 a day shall be paid by the relevant Trade Licensing Office on the basis of an affidavit.
Please do not hesitate to contact us with specific questions, we are at your disposal at any time.
Your WTS Alfery Team