Amendments to tax laws discussed in the Chamber of Deputies
15.11.2010Company: Amcham
The Government passed rather extended amendments to the Income Tax Act, Value Added Tax Act and Real Estate Tax Act. At the time when this newsletter was being drafted, the schedule of the legislative process in the Parliament was not available due to the possible announcement of a state of emergency legislation. We will provide a summary of the most important changes after they are passed by the Chamber of Deputies.
Exemption of royalties from 2011
We would like to notify you of the approaching end of the transition period during which exemption of royalties pursuant to Section 19 (1) (zj) of the Income Tax Act was not applied. Put simply, this Section concerns royalties flowing to a company connected by capital (25%) with a registered office in the EU, Switzerland, Norway or Iceland from a Czech company – Czech tax resident. From 2011 onwards, a duty to apply the exemption from withholding tax will arise rather than a right to opt for the exemption. A foreign recipient will not be allowed to credit the tax which has been withheld incorrectly in the Czech Republic.
To apply the exemption, a decision by the tax administrator in respect of granting the exemption in accordance with Section 38nb of the Income Tax Act is required. If you make payments abroad at the beginning of 2011, we would recommend filing a timely application to the tax authority, considering the period necessary for processing the decision. Applications may also be filed this year, before said provision of the Income Tax Act becomes effective.
If this provision applies to you, we will be pleased to provide you with more detailed information and, if required, we can assist you in obtaining a decision from the tax authority.
The period for VAT refunds for 2009 has been extended to 31 March 2011.
The Ministry of Finance published good news for VAT payers who still have not claimed back the VAT paid in prices for goods and services in other EU member states in 2009. VAT payers who did not manage to file an application in the previous period, i.e. by 30 September 2010, requesting a refund of the VAT paid in another EU member state in 2009 may now file their applications up until 31 March 2011. The information on the VAT refund process and its terms can be found on the website of the Ministry of Finance www.mfcr.cz.
If you have any questions regarding the issues mentioned above, please do not hesitate to contact us.
Jaromír ZBROJ, Head of TACOMA Tax
Tel: +420 226 219 000
Mobile: +420 731 411 268
E-mail: jaromir.zbroj@tacoma.eu
www.tacoma.eu
