Current development in legislation and new changes regarding self-employed persons

The Chamber of Deputies approved the governmental tax package containing a number of changes regarding namely the income tax, value added tax and Tax Code. We informed you about the planned changes in our newsletter published in December 2016. Originally, the changes should have been effective from 2017 (some of them even for the 2016 tax period) but because of the delay in the approval process, the effectiveness will be postponed. It means that some of the changes will become effective in 2017 and some of them from the 2018 tax period (for example, applying the withholding tax to minor incomes from the dependent activity and not only to those under an agreement on carrying out work). The law will have to be discussed in the Senate and signed by the president.

Based on amendments, there were approved some additional changes such as:

Reduction of maximum amounts of expense allowances for self-employed persons and cancellation of limitation of tax reliefs to tax

Reduction by half of the maximum amounts of expense allowances that can be used by self-employed persons or persons with income from renting real estate. A tax payer whose income is CZK 1,000,000 will reach the maximum expense allowance. The expense allowance stays constant for any higher income. On the other hand, the tax payers using the expense allowances can claim the tax reliefs for a spouse and tax advantages for children with no limitations.

Tax payers with their income less than CZK 1,000,000 can claim the tax relief for a spouse and the tax advantages in the 2017 tax period. Tax payers with their income above CZK 1,000,000 can make a choice regarding the 2017 year: they can use the expense allowances in the reduced maximum amount and at the same time claim the tax relief and advantages, or they can use the expense allowances in the current amount and their claim for tax relief and advantages will be limited.

Extension of possibilities for self-employed persons to apply for tax determination by a lump sum

Newly, also the self-employed persons who have employees or income from dependent activities can apply for tax determination by a lump sum.

Amendments regarding introduction of some exceptions from the electronic record-keeping of cash sales obligation for some entrepreneurs were not approved. The entrepreneurs are obliged to start using the ERCS according to conditions and deadlines stated in the current version of the act.