Tax Newsletter - Archive
Forvis Mazars Tax View - archive of tax articles
Legislative Changes in Agreements and Employee Benefits from 2025
An amendment proposal was published at the end of October, introducing the third version of changes in taxation and insurance premium contributions for income from Agreements on Work Performance (hereinafter "AWP") effective from 1 January 1 2025. These changes respond to data collected from the mandatory AWP records at the Czech Social Security Administration (hereinafter "CSSA") since July 2024, which showed that the originally approved amendment to Act No. 163/2024 Coll. and its concept of so-called reported agreements would not bring the expected results. Moreover, it would have meant a significant administrative burden for both employers and social security administration.
Income Tax Report – A New Obligation for Accounting Entities and Its Impact
As part of the amendment to the Accounting Act, effective from 1 January 2024, a new obligation has been implemented into Czech legislation for selected entities to prepare and make accessible a report containing information on income tax amounts and related economic information about individual companies within a group, referred to as the Income Tax Report (hereinafter the “Report”). This obligation applies to large accounting units and consolidating entities that meet certain turnover thresholds, provided a cross-border element is also present. The amendment transposes the Directive (EU) 2021/2101 of the European Parliament and Council on public country-by-country reporting (PCbCR), aiming to enhance transparency of tax information for multinational corporations.
Amendment to the European VAT Directive - ViDA alias VAT in the Digital Age
In early November 2024, the Economic and Financial Affairs Council (ECOFIN) approved a proposal for an amendment to the European VAT Directive, which should bring a significant extension of electronic invoicing and introduce so-called digital reporting, i.e. the real-time transmission of issued VAT invoices electronically to the Tax Authority. Significant changes are also expected in short-term accommodation and passenger transport platforms. The package of changes, known as ViDA (VAT in the Digital Age), should be gradually implemented by EU Member States, with the first changes to be reflected in Member States' national legislations as of 2028. The proposed changes, consisting of three pillars, should affect almost all VAT payers established in the EU.
Amendment to the VAT Act 2025 – Part II.
Change in the Process for Reporting Posted Workers to the Czech Labour Office
A requirement for EU companies to report the posting of foreign employees to the Czech Republic in the context of the transnational provision of services has existed for many years in the Czech Republic. This reporting is important as it allows the Czech Labour Office to monitor compliance with labor standards, prevent “social dumping“ from countries with lower level of employee labour law rights, and ensure that posted workers receive fair treatment comparable to local workers.
Early retirements and further tightening from October 2024
From October 2024, another change in the area of early pensions, which was introduced by Act No. 270/2023 Coll., amending Act No. 155/1995 Coll., on pension insurance, will enter into force.
Establishment of a holding structure – abuse of law
The Supreme Administrative Court (SAC) established breakthrough case law on the assessment of holding structures, describing and defining the economic, legal, and business reasons for establishing a holding structure in the context of pre-existing concept of abuse of law. Furthermore, it established the tax authority‘s obligation to prove that the predominant purpose of the transaction is to achieve a tax advantage when assessing an abuse of law.
Amendment to the VAT Act 2025
Like every year, this year too, it is necessary to prepare for the amendment to the VAT Act (Parliamentary Document No. 726), which will bring a number of changes with effect from 1 January 2025. Compared to the last year, when the amendment concerned mainly VAT rates, there should now be minimal changes in the area of VAT rates.
Significant changes proposed related to employment of foreigners in the Czech Republic
The Czech Ministry of Labor and Social Affairs has put forward draft legislation which would make it much easier for Czech companies to employ foreigners from several countries outside of the European Union.
