Dear ladies and gentlemen,
in attachment please find English/Czech version of newsletter about actual topics: Tax Law Amendments within Govermental savings – further development, Unrealized FX gains as non taxable income – further development and Amendment of the Criminal Procedure Act.
If you have any questions, please contact us.
Yours sincerely, Accace team
Tax Law Amendments within Govermental savings – further development
The Lower House of Parliament approved within its Third Reading on 13 July 2012 a proposal of the amendments for Governmental savings. We have informed you about main changes in the tax field in our last tax news.
During the legislative process, no changes regarding proposed tax amendments were approved.
The proposal needs to be further approved by the Senate and signed by the President, nevertheless no more changes can be made. Therefore, if the proposal is approved during the legislative process, the proposed tax changes as introduced originally should be effective as of 1 January 2013.
The proposal includes, among others:
- Cancellation of maximal assessment base for health insurance, no similar changes are proposed as regards social security.
- Increase of VAT rates.
- Implementation of the new solidarity tax.
- Limitation of lump-sum expenses for entrepreneurs.
- Increase of the real estate transfer tax.
We will inform you about further development in this area.
Unrealized FX gains as non taxable income – further development
In our May tax news we informed you in about new decision of the Supreme Administrative Court regarding tax treatment of unrealized foreign exchange (“FX”) gains.
According to this decision the unrealized FX gains should not be included in taxable income of companies as they do not represent a result of companies’ business activities but rather occur only due to the currency conversion for accounting purposes.
Such decision was in contrary to the currently applied approach of tax practice and therefore, the reaction of tax administrator was tensely expected.
In June 2012, the General Financial Directorate issued a statement that the decision of the Supreme Administrative Court concerned a specific situation of a specific taxpayer and that the General Financial Directorate does not intend to change the current tax practice.
This means that following the current practice (i.e. taxation of unrealized FX income) is not incorrect. On the other hand, argumentation of the Supreme Administrative Court was quite straightforward and thus taxpayers may found a support in this decision if they apply another approach.
To conclude, under the current circumstances, taxpayers might de facto choose an alternate which may be more favorable for them. In some cases, following the decision of the Supreme Administrative Court may mean significant savings.
Amendment of the Criminal Procedure Act
On September 1, 2012, an amendment of the Act No. 141/1961 Coll., on Criminal Procedure, as amended, becomes effective. This amendment introduces a new concept of “agreement on guilt and punishment” within the criminal procedure. This agreement shall be negotiated by and between the public prosecutor and the accused and her/his attorney on the basis of a request of the accused or even without such request. The essential condition for conclusion of such agreement on guilt and punishment is a declaration of the accused that he/she committed the act he/she is prosecuted for, and at the same time no doubts on verity of such declaration arises from the proofs and evidence and other results of the preparatory inquiry obtained so far. Also, the agreement on guilt and punishment cannot be concluded for especially serious crimes (intentional crimes with upper rate of imprisonment punishment of 10 years) and during proceedings against fugitive. The agreement shall contain in particular the declaration of the accused that he/she committed the respective act described in the agreement together with its legal qualification, an agreement on the height of the punishment and manner of its execution, and in case the harmed claims damages or disbursement of unjustified profit, also an agreement on way of settlement of such damage or disbursement of the unjustified profit may be part of the agreement on guilt and punishment. The concluded agreement must be approved by a court after it is presented to it by the public prosecutor. Such agreement is approved by a convicting judgment.
