Since August last year, a legislative package containing an amendment to the Accounting Act has been tabled in the Chamber of Deputies. While the amendments to the Accounting Act and the Auditors Act are important, this article focuses on the extensive amendment to the Matching Taxes Act that is part of this package. The approval of this amendment is eagerly awaited not only by accounting entities but also by the companies affected by the equalisation taxes. On 13 February 2025, this legislation passed its first reading in an extraordinary session of the Chamber of Deputies.
What should this amendment bring to the taxpayers of the equalisation tax?
- The biggest problem with the current top-up tax law is that the information statement and the Czech top-up tax return must be filed by the end of the tenth month after the end of the tax year, i.e. by the end of October 2025 for the tax year 2024. This deadline is extremely short. In fact, much of the information needed to complete the summary and return is unlikely to be available at that time. This is because some of the rules for calculating the Czech top-up tax are based on rules, rulings or data from the ultimate parent entity that will not be available because the deadlines for creating and filing them are longer.
- The amendment also clarifies certain concepts, such as the definition of investment fund and reporting period, and modifies the rules for certain safe harbors, both temporary and permanent.
- The exceptions and rules for information reporting remain. It is still the case that it is sufficient for one entity in the group to file the information return, the other entities only have to report this fact to the tax authorities.
We would like to remind you that the Czech top-up tax applies to Czech companies that are part of large multinational and national groups with consolidated annual revenues exceeding EUR 750 million (almost CZK 19 billion). If a company belongs to such a group, we recommend paying close attention to this area as it will be subject to certain obligations. The company will be subject to Czech top-up tax in a situation where the holding company's member companies that are in the Czech Republic will have an effective tax rate lower than 15%. If the effective tax rate is higher, they will still be subject to certain administrative obligations.
Please also note that top-up taxes also apply to large national groups if they meet the consolidated annual revenue criteria. This may be surprising information for many, as most of the available information focuses exclusively on the cross-border element of the top-up taxes. Such large national groups include, for example, the Capital City Transport Company. Prague or the holding Pražská plynárenská.
Autor: Petra Pospíšilová