Expected changes from 2013
The following changes are part of a government proposal, which has been rejected by Czech Parliament. It is expected, that the government will insist on the proposal and will resubmit it again for approval.
Accounting and Taxes
- VAT – increase of rates, electronic filing of tax returns: VAT rates shall be increased from 20% and 14% to 21% and 15% for the years 2013-2015. Flat rate of 17,5% approved earlier for 2013 shall be cancelled. The amendment would impose the obligation for all taxpayers to file tax returns electronically.
- Real estate transfer tax – increase of rate: Government amendment suggests increase of real estate transfer tax from 3% to 4%.
- Cash payments limitation: Daily limit for cash payments of CZK 350.000 should become limit for 28 days.
Payroll and pensions
- Progressive personal income tax: Government proposes a solidarity surcharge on personal income tax for tax payers whose income exceeds 48 times the average salary. Excess income shall be subject to PIT with 7% increase (i. e. 22%, instead of 15%).
- Lump sum expenses: Lump sum expenses defined as a percentage from income 40% or 30%, shall be limited to CZK 800.000 or CZK 600.000 respectively. Taxpayers claiming lump sum expenses would not be eligible for tax credit for spouse and for maintained child.
- Cancellation of health insurance ceiling: Government is also proposing to cancel ceiling on contributions to public medical insurance.
Amendment of the investment incentives act
According to the amendment of the Investment incentives Act effective from 12. 7. 2012, technologic centres and strategic service centres (further stated as „SSC“) are eligible for investment incentives.
Tax credit is available during 10 immediately following taxable periods. Incentives for SSC are available from an investment of CZK 10 millions and creation of 40 new jobs places. Eligibility criteria for reaching on investment incentives in manufacturing industry are mitigated, especially for districts with high unemployment rate.
Tax documents in electronic form and electronic signature
At present it is possible with agreement of customer to issue tax documents in electronic form. Such documents should be provided with electronic signature. Government proposes a possibility to issue tax documents without electronic signature. Even though in practice, tax documents without electronic signature are already being issued.
Frequently asked questions
Archiving of Tax documents outside the Czech Republic
VAT payers shall archive all tax documents for a minimum period of 10 years from the end of the taxable period. In case the tax documents are stored outside the Czech Republic, the VAT payer is obliged to notify the tax administrator in advance, preferably by a letter. In case the tax documents are stored in electronic form abroad, the VAT payer must be able to arrange free remote access for the tax administrator.
Criteria for statutory audit obligation
Accounting entities are obliged to have their ordinary or extraordinary financial statements audited by a statutory auditor under following conditions:
- total assets exceed the amount of CZK 40 million,
- net turnover exceed the amount of CZK 80 million per annum,
- average number of employees of 50 for the accounting period.
- Join stock company – in case at least one of the conditions specified above was reached.
- Other business companies and cooperatives – in case at least two of the conditions specified above were reached.
Tax credit for students – changing of school
Tax credit for students is available during the period between finishing secondary (high) school and starting studies at a university. The same works when changing between universities. The break between the studies cannot be longer than 3 months. Tax credit is available also during daily studies at one year foreign language courses. Part-time studies are not sufficient for obtaining the tax credit for students.
Agreement on Working Activity and medical insurance
Employees working under Agreement on Working Activity are not obliged to contribute to the medical insurance system if their gross income does not exceed CZK 2.500 per month. In case that monthly income is in the interval of CZK 2.500 to CZK 8.000, employer is obliged to gross up the base up to the minimum salary, so that the minimum medical insurance is paid. The gross up is not necessary provided medical insurance is paid by the Czech state.