Tax Newsletter - Archive
Forvis Mazars Tax View - archive of tax articles
Non-Monetary Contributions to Companies Back in the Spotlight (Application of VAT in Barter Transactions)
The Court of Justice of the European Union (hereinafter ’CJEU’), in its recent ruling C-241/23 P. sp. z o.o. (hereinafter the ’Ruling’), addressed the application of VAT in the case of non-monetary contributions to a company’s share capital for which the contributor received newly issued shares. This Ruling is highly significant in the Czech Republic as it alters some of the established interpretations of VAT.
Changes in the application of the arm’s length principle for marketing and distribution companies
In February 2024, the OECD published its final report on Pillar 1 - Amount B (hereinafter the “Report”), the overall aim of which is to simplify and streamline the application of the arm’s length principle for companies carrying out basic marketing and distribution activities.
Transfer pricing audits from the perspective of the Financial Administration
At the end of March, the Financial Administration published a press release on tax audits focused on transfer pricing (available HERE in Czech). Not only do the figures on the number of transfer pricing audits carried out and the related tax assessed in 2023 confirm the Financial Administration’s continued interest in this area, the Financial Administration itself states that it is aware of the potential that additional taxation related to transfer pricing represents for the state budget.
Change in the Taxation of Employee Stock and Option Plans
On 1 January 2024, an amendment to the Income Tax Act came into effect, significantly adjusting taxable moment of income from employee stock and option plans. The amendment brings a variety of interpretative and practical uncertainties, among which stands out the different treatment in the tax area comparing to legislative regulation of social and health insurance contributions.
Methodological Information on the Taxation of Employee Benefits
The General Financial Directorate (GFD) has issued methodological information on the taxation of employee benefits, as modified by the consolidation package effective from January 1, 2024.
Long-Term Investment Product
As part of the amendment to the law on investment on capital market and the associated amendment to the income tax law, a new product for saving for old age, a long-term investment product (hereinafter as "LTIP"), has been introduced. It is intended to function as an alternative to old age saving products that are already tax supported, such as products in the third pension pillar (pension insurance and supplementary pension savings) and life insurance.
Changes to the Intrastat Reporting
As of 1 January 2024, there have been several changes in the reporting of movements of goods between EU Member States and the Czech Republic. We provide a brief overview of these changes.
Interpretation of the General Financial Directorate on Changes in VAT Rates
The General Financial Directorate (hereinafter as ‚GFD‘) issued the expected methodological information on VAT rates changes from 1 January 2024 (hereinafter as ‚the Information’) on 12 January 2024. The aim of the Information was to eliminate interpretive ambiguities, even though a number of areas remain unclarified. Our comments on selected topics are mentioned below.
Introduction to Top-Up Taxes
In December of last year, the Czech Republic completed the implementation of the EU directive aimed at ensuring a global minimum level of taxation for multinational groups of companies and large domestic groups within the EU. It essentially introduced new taxes on profits, namely top-up taxes, and thereby new tax obligations for selected taxpayers.
SAC confirmed it is possible to claim higher tax credit from investment incentives in supplementary tax return
In a ruling from November of this year, the Supreme Administrative Court (SAC) confirmed that recipients of investment incentives can claim a higher tax credit when filing supplementary tax return, in which the tax base is increased. This approves the opinion of a part of the professional community, which has been questioned by tax authorities in some cases in recent years.