close
Share with your friends

Czech Republic: Tax proposals expected in 2020 tax package

Czech Republic: Tax proposals expected in 2020

The 2019 tax package entered into effect last month. While most changes to income taxes will only affect taxpayers starting from the next accounting period, some new reporting obligations will apply immediately (e.g., the duty to report tax-exempt income such as interest, dividends or royalties paid to tax non-residents). The tax authorities have issued waivers of this reporting obligation to some entities; however, their approach to the scope of such waivers seems rather cautious.

1000

Related content

The Ministry of Finance is already busy preparing a 2020 tax package. The Ministry of Finance disclosed draft amendments to tax laws for 2020, generally with a goal of increasing revenues. Changes would primarily affect:

  • Insurance companies that would be taxed on a one-off basis, the difference between recorded technical provisions and provisions under the EU Solvency II rules. According to the draft, only technical provision amounts determined pursuant to the EU Solvency II directive would be tax deductible. At present, insurance companies must calculate their technical provisions in compliance with the EU directive for the purpose of reporting to the Czech national bank, and only technical provisions in the amounts reported in the accounting books tax are deductible. In terms of their value, provisions under the EU Solvency II rules tend to be significantly lower than technical provisions under accounting regulations.
  • Taxes on cigarettes and tobacco, spirits, and gambling that would increase. The draft amendment would substantially increase excise taxes (duties) on spirits, cigarettes and tobacco with a 10% increase on cigarettes and tobacco and approximately a 13% increase on spirits. Similarly, the amendment plans to increase the tax on gambling, especially on lighter forms of gaming such as lotteries and bingos (an increase of 7 percentage points). Lastly, gas used in residential homes boiler rooms / heating systems would no longer be exempt from the tax on natural gas.

Digital tax

The Ministry of Finance is planning to submit a digital tax proposal by the end of May 2019. According to the ministry’s estimate, this would generate additional annual revenues of CZK 5 billion. There would be a new 7% tax on placing targeted advertising on digital interfaces by corporations with a global turnover exceeding €750 million. There are also plans to impose tax on the use of multilateral digital interfaces and the sale of collected user data. The amendment is proposed to become effective from mid-2020.


Read a May 2019 report prepared by the KPMG member firm in the Czech Republic

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in 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.

Connect with us

 

Want to do business with KPMG?

 

Request for proposal