Tax and legal news

After a long approval process, an amendment to the tax laws was published in the collection of laws, effective from 1 April 2019. We have informed you about the amendments already, so now we just wanted to briefly mention the substantial changes. We will comment on the impact of the changes in our upcoming news.

If a Czech entity is subject to the duty to withhold tax from income paid to/accounted to a foreign entity, then the Czech entity is obliged to report such income and the withheld tax.

If you have employees who are not subject to mandatory social security and health insurance in the Czech Republic but are subject to foreign insurance in a member state of the European Union or the European Economic Area or Switzerland, then determination of their super-gross salaries for the purposes of calculating tax from dependent activities changes from this January.

The United Kingdom’s withdrawal from the European Union will of course have an impact on many tax areas, either business entities or citizens. The impact on the Czech tax area can be assessed only when it is clear if there is a deal on Brexit and a certain transient period or if there is a hard Brexit.

If the tax package is approved and its wording is kept after the Senate debate, then self-employed persons and persons with income from renting real estate with income above CZK 1,000,000 can look forward to claiming higher expense allowances. The amendment to the Income Tax Act should increase expense allowances to the original maximum amounts used up to 2017, and thanks to the amendment, it should become effective from the 2019 tax period.

This year, we informed you about the planned changes to tax law related to VAT and corporate income tax that are supposed to become effective from 1 January 2019. But the respective bill is still in the Chamber of Deputies awaiting approval, so the question is whether the approval process will be completed by the end of the year and the changes will really be effective from 1 January 2019 or later.