The Czech government on 18 November 2019 approved the introduction of a digital services tax. The bill will now be considered by parliament.
The tax would be imposed at a rate of 7% on the provision of digital services in the territory of the Czech Republic for certain providers that satisfy the threshold criteria:
Compliance with these criteria would be assessed for the “decisive period” defined as the last accounting period for which the financial statements have been prepared before the first day of the tax period (calendar year). If the entity or the group that was not a payer of digital services tax in the decisive period does not have enough information to calculate the threshold amounts, the amounts would be determined based on a reasonable estimate. These amounts would also be decisive for the calculation of tax pre-payments due for the period before the first tax return is filed. The registration would need to be filed within 15 days from the day when the first tax obligation arose after the entity became a payer of the tax.
The following digital services have been defined as taxable:
Definitions, tax base, tax rate, effective date
However, the exact timing and any possible changes to the conditions currently proposed would depend on the legislative process. The law would be expected to apply until 2024, depending on whether an international solution could be found (that is, at the OECD).
For more information, contact a tax professional with the KPMG member firm in the Czech Republic:
Petr Toman | +420 222 123 602 | firstname.lastname@example.org
Ladislav Malusek | +420 222 123 521 | email@example.com
Vaclav Banka | +420 222 123 505 | firstname.lastname@example.org
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