Tax news for the year 2019

8. 1. 2019
At the end of the last year, the Chamber of Deputies approved the so-called tax package, which amends especially the Income Tax Act, the Value Added Tax Act and the Tax Code. Most of the changes brought by the tax package will come into effect during 2019.

Amendments to the Income Tax Act
  • limitations on the deductibility of interests from the tax base, when exceeding CZK 80 million or 30% of EBITDA, calculated for tax purposes from pre-tax tax profits, interest, depreciation and amortization
  • taxation on the transfer of property to a permanent establishment or head office abroad without change of ownership
  • taxation of controlled foreign companies (controlled foreign company – CFC rules)
  • the amendment responds to the different legal qualifications (hybrid mismatches) of one legal fact in different countries in order to prevent situations where the transaction is exempted from tax in one country while in the other one is eligible expenditure
  • corporations, that pay out profits or other earnings abroad that are normally subject to withholding tax but are exempted or are not subject to tax, will report this payment to the tax administrator
  • the rules for applying the deduction to research and development are changing
  • the limit of lump sums for individuals will be increased to CZK 2 million
  • with effect from January 1, 2019, the minimum wage increases to CZK 13 350, and the tax rebate threshold for child placement in pre-school facilities increases as well
  • the limit for solidarity tax changes to CZK 1 569 552.

Amendment to the VAT Act The amendment includes especially the following changes:
the implementation of European Union law (directives) in the field of vouchers and e-commerce, extends the possibilities for using the right to deduct the tax on fixed assets at the time of registration of the payer, sets out more detailed rules for determining the right for tax deduction in partial amount, regulates the notion of remuneration and economic activity.

Determines the tax base for payment by virtual currency, regulates the rules for correcting the amount of tax in case of a claim against the debtor in insolvency and in case of reorganization. Changes the rules for fines in connection with the Control statement.

Amendment to the Tax Code Following the European legislation, the basic principle of tax administration, the so-called prohibition of abuse of right, is added.