Changes to the taxation of insurance companies are among the tax legislative items that were effective beginning January 2020.
The new tax law will primarily affect insurance companies. Tax deductible provisions will be reduced by the amounts recoverable from reinsurance contracts and, simultaneously, increased by deferred acquisition costs for insurance contracts. Any impact of the transition to the new rules will be distributed over two tax periods after the amendment’s effective date. Additional taxes will therefore apply in 2020 and 2021.
Another provision concerns the taxation of one-crown bonds. For the tax periods after enactment, interest income from bonds with a low nominal value and issued before 2013 will not be rounded to the level of one security (this prior rounding led to the non-taxation of this income). In accordance with the new provision, the final tax per taxpayer (not interest income) will be rounded. This method of rounding will apply to all bonds, regardless of their issue date.
Excise tax, taxation of gambling winnings
The rates of excise taxes on spirits and tobacco products are increased.
The tax rate package includes a provision to limit the tax exemption of winnings from gambling to 1 million Czech crowns. Winnings exceeding 1 million Czech crowns will be subject to a 15% withholding tax. Also, the actual winnings cannot be less than the tax withheld.
Read a January 2020 report prepared by the KPMG member firm in the Czech Republic
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.