Tax and legal news

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.

The financial administration is carrying out inspections on the taxation of income from providing accommodation via Airbnb. The financial administration considers such income as income from providing accommodation services with an impact not only on income tax, but also on social security, health insurance, and VAT.

A proposal for the VAT amendment (with expected effectiveness from 2019) should introduce an obligation to retroactively adjust VAT deductions claimed on substantial repairs made to real estate if the real estate is transferred within 10 years of the repairs. This results in a reduced VAT claim.

From 2021, VAT exemption should always apply to renting residential premises, which means that landlords will not be allowed to claim VAT from related received supplies.