What investors & companies need to know!
What tax changes will 2021 bring to the Czech Republic? What should investors pay attention to in the future – and which decisions will benefit them? TPA’s experts have summarized the most important tax news for the Czech Republic for you. Read the Czech Tax Update for 2021 here!
Real Estate Acquisition Tax Abolished
Real estate acquisition tax (formerly 4 %) was abolished retroactively for the cases where the real estate was acquired on or after 1 December 2019 (the date of entry into the Cadastre being decisive). For individuals, this is compensated by stricter criteria for real estate sale exemption and by a lower limit for the use of the mortgage interest as an item deductible from the personal tax base. However, for legal entities, no such a countermeasure was introduced.
Increase of Tax Allowance per Taxpayer
The tax allowance per taxpayer increased from CZK 24,840 (EUR 944) to CZK 27,840 (EUR 1,058) p.a. since January 2021.
Super-gross Wage and Solidarity Tax Abolished
The super-gross wage and the solidarity tax are abolished and a progressive taxation is introduced at the tax rates of 15 % and 23 %. The increased tax rate is applicable for the amount exceeding the threshold of 48 times the average wage; CZK 1,701,168 (EUR 64,646) p.a. for the year 2021.
Tax Loss Carry Back
An amendment to the Income Tax Act effective from July 2020 introduces an option to carry back the tax losses up to two years preceding the tax period for which the tax loss has been assessed. The maximum amount that may be carried back from one taxable period is limited to MCZK 30 (approx. MEUR 1,2) for both previous periods. The possibility to carry the tax loss forward remains at five subsequent tax periods.
Changes in Asset´s Tax Depreciation
The amendment to the Income Tax Act introduces special tax depreciation period for assets categorized in the 1st class (1 year instead of 3 years) and 2nd class (2 years instead of 5 years) purchased from 1st January 2020 to 31st December 2021. The amendment also increases the threshold for classification of individual tangible assets in the category of tangible assets from CZK 40K to CZK 80K and abolishes tax regulation of depreciation of intangible assets purchased after the amendment has come into effect; tax depreciation of intangible assets will newly correspond to the accounting depreciation.
Value Added Tax Amendments
As of May 2020 among others the supply of tap water, catering services e-books and as of July 2020 accommodation services are newly subject to 10 % super reduced VAT rate.
Since September 2020, so called “quick fixes” rules are implemented; Harmonized rules on call-off stock arrangements, new substantive conditions with respect to intra-Community supplies of goods (stating VAT ID of the customer, submission of VIES declaration), harmonized rules regarding chain transactions and determining of place of the supply, list of recommended criteria for the documentary evidence required to claim an exemption for intra-Community supplies were implemented. Also, as of September 2020, the exemption applicable on effected export of goods is linked to the fact whether the goods physically left EU, not the export customs regime applied.