Tax Newsletter - Archive
Forvis Mazars Tax View - archive of tax articles
Planned changes in the field of VAT for immovable property
In the near future, there are several changes expected in the field of VAT for immovable property. From 1 January 2024, an amendment to the VAT Act should come into force in connection with the adoption of Act No. 284/2021 Coll., which amends, among other things, the VAT Act in connection with the new building regulations (hereinafter the ‘Amendment’). There is also a discussion about the publication of new information by the General Financial Directorate (hereinafter the ‘GFD’) regarding the application of the VAT Act for immovable property (hereinafter the ‘Information’). We have selected several interesting topics that we consider important. When reading the text below, it is necessary to consider that the Information and the legal interpretation of the Amendment are still being discussed.
VAT in the Digital Age
The European Commission’s action plan called ‘VAT in the digital age’ (hereinafter as ‘ViDA’) proposed a notable changes to the current VAT legislation. These changes aim to enhance the EU VAT system’s resilience to fraud and modernize it to adapt to the digital age. As ViDA package will be applied to all sales of goods and services to customers in the EU, all businesses based in the EU will be affected by the new rules.
Can the tax administrator use camera recordings to challenge the logbook?
The Constitutional Court decided on a case in which the tax administrator used police camera recordings to challenge the logbook and rejected the claimed VAT deduction for the purchased vehicle.
Government consolidation package of measures
The government led by Prime Minister Petr Fiala presented a consolidation package last month, which is expected to bring savings of 94 billion Czech crowns to the state budget this year and 148 billion Czech crowns after two years. The recovery package consists of 58 measures aimed primarily at reducing the budget deficit. The long-discussed pension reform is also part of the measures. Below, we have summarized the most significant changes for you.
Changes in the waiving of fines for control statement and tax sanctions
The Financial Administration amended the conditions for the waiving of fines for not submitting a control statement and issued a new instruction concerning the general waiver of tax accessories.
Donations provided in 2023 in connection with the military conflict on the territory of Ukraine
At its meeting in January 2023, the Government of the Czech Republic approved a proposal to extend the validity of measures in the field of taxation in connection with the military conflict on the territory of Ukraine caused by the invasion of the army of the Russian Federation. This measure was originally adopted by Act No. 128/2022 Coll., which indirectly amended the income Taxes Act and which originally applied only to donations provided in 2022. However, as the armed conflict in Ukraine continues to rage on, while citizens and business entities continue to provide assistance to Ukraine and its population, the government approved the extension of these measures for 2023.
The case of the Court of Justice of the EU amends the current practice in triangular trade
In its recent decision C-247/21 Luxury Trust Automobil, the Court of Justice of the EU (‘CJEU’) expressed, somewhat surprisingly, the view that the correct content of invoices for triangular trade has a major impact on the possibility of applying this regime.
Tax (non)deductibility of re-invoicing expenses
We are bringing the conclusions of the court case of the Supreme Administrative Court (hereinafter referred to as the “SAC”) in the area of the application the Section 24 (2) (zc) of Act No. 586/1992 Coll., on Income Taxes (hereinafter referred to as "ITA"), as amended by the end of 2014. In the considered case, the tax administrator assessed an additional tax and a penalty for the tax periods of 2013 and 2014 to the taxpayer. The reason for this was that the taxpayer included representation expenses in the tax deductible expenses pursuant to the aforementioned provisions of ITA.
The payment of a profit share concealed by the sale of shares
In a recent court case, the Supreme Administrative Court (SAC) dealt with the payment of a profit share to a Cypriot company coming from a Czech company. The SAC came to the conclusion that the actual legal situation had been concealed, when the main purpose of the legal acts was the majority shareholder's intention to avoid taxation in the Czech Republic when paying the profit share. It thus agreed with the conclusions of the tax administrator, which assessed an additional withholding tax that was supposed to have been withheld when the profit share was paid to a natural person, the beneficial owner of the income.
Tax deductibility of interest on an acquisition loan – abuse of law
After a longer time, a court decision has appeared in the Czech Republic that is positive for the taxpayer as part of the issue of the tax deductibility of interest on an acquisition loan and the application of the institute of abuse of law. So far, however, this is only the decision of the regional court and the tax administration has filed a cassation appeal in the matter, which will therefore have to be assessed by the Supreme Administrative Court.