In August, the Chamber of Deputies began debating a technically clarifying draft amendment to the law on the equalisation tax. What does it bring and why is it worth getting acquainted with the changes as soon as possible?
The answer is quite simple. The draft amendment modifies the rules for filing an information summary containing the taxpayer's decision on the procedure for determining the Czech top-up tax, including the application of exemptions from the Czech top-up tax (safe harbours) already in the first reporting period starting after 31 December 2023.
It is important to note that if the decisions concerning the procedure for determining the Czech balancing tax as set out in the first submitted information sheet for the Czech balancing tax differ from the decision concerning the procedure for determining the attributed balancing tax as set out in the subsequently submitted information sheet, the data from the information sheet for the attributed balancing tax will be decisive in relation to the Czech balancing tax.
Therefore, for the correct application of the safe harbour rules, it will be necessary to correctly determine the period over which compliance with the conditions for the use of safe harbours will be tested.
Until now, we have used the term "taxable period" in relation to the first period for which any of the safe harbour rules for the application of the balancing tax may apply. The amendment replaces the term 'tax period' with 'reporting period'. The reason for this is that very often in large multinational groups there is a situation where the accounting period of the member entity differs from the period for which the consolidated accounts are drawn up. The reporting period is the period for which the consolidated financial statements are prepared. What does this seemingly subtle change mean? If the accounting period of the member entities differs from the period for which the consolidated financial statements are prepared, it will be necessary to restate the results of the member entities in the same way as for the consolidated financial statements.
According to the number of reporting periods for which the safe harbour rules can be applied, we distinguish safe harbours into:
We advise you to test well in advance whether your company meets the criteria for the use of safe harbours in relation to the Czech top-up tax. If the safe harbour rule is not applied in the first Information Statement on the Czech top-up tax, it will not be applicable. If the draft amendment is approved, the deadline for the submission of the first Information Sheet containing the decision on the procedure for determining the Czech equalisation tax will expire on 30 June 2026.
Autor: Lenka Lopatová
The answer is quite simple. The draft amendment modifies the rules for filing an information summary containing the taxpayer's decision on the procedure for determining the Czech top-up tax, including the application of exemptions from the Czech top-up tax (safe harbours) already in the first reporting period starting after 31 December 2023.
It is important to note that if the decisions concerning the procedure for determining the Czech balancing tax as set out in the first submitted information sheet for the Czech balancing tax differ from the decision concerning the procedure for determining the attributed balancing tax as set out in the subsequently submitted information sheet, the data from the information sheet for the attributed balancing tax will be decisive in relation to the Czech balancing tax.
Therefore, for the correct application of the safe harbour rules, it will be necessary to correctly determine the period over which compliance with the conditions for the use of safe harbours will be tested.
Until now, we have used the term "taxable period" in relation to the first period for which any of the safe harbour rules for the application of the balancing tax may apply. The amendment replaces the term 'tax period' with 'reporting period'. The reason for this is that very often in large multinational groups there is a situation where the accounting period of the member entity differs from the period for which the consolidated accounts are drawn up. The reporting period is the period for which the consolidated financial statements are prepared. What does this seemingly subtle change mean? If the accounting period of the member entities differs from the period for which the consolidated financial statements are prepared, it will be necessary to restate the results of the member entities in the same way as for the consolidated financial statements.
According to the number of reporting periods for which the safe harbour rules can be applied, we distinguish safe harbours into:
- permanent safe harbours,
- temporary safe havens.
- The Czech part of the group will make ordinary profits, which in practice means that the profits of the group made by the entities in the Czech Republic will be at most equal to the profits excluded by economic substance under the Czech rules.
- The qualifying income of the entities in the Czech Republic for the reporting period will be less than EUR 10 000 000.
- Qualifying profit of member entities in the Czech Republic for the reporting period will be less than EUR 1 000 000.
We advise you to test well in advance whether your company meets the criteria for the use of safe harbours in relation to the Czech top-up tax. If the safe harbour rule is not applied in the first Information Statement on the Czech top-up tax, it will not be applicable. If the draft amendment is approved, the deadline for the submission of the first Information Sheet containing the decision on the procedure for determining the Czech equalisation tax will expire on 30 June 2026.
Autor: Lenka Lopatová