Tax changes including the VAT rates were approved again by the Chamber of Deputies
Yesterday on 19 December 2012 the Chamber of Deputies decided on the final version of tax amendments, especially with the government’s tax package including changes of VAT rates and extensive technical amendment of VAT Act.
Government’s tax package
The Government’s tax package includes especially the following changes:
- Introduction of „solidarity contribution“ for the employment and self-employment income with the income exceeding 4 times the average salary amounting to 7 %.
- Cancelation of the cap for the payment of insurance premiums for public health insurance.
- Restrictions on using the 30 and 40 percent flat rate expenditure for self-employed persons and rental income only when annual income does not exceed CZK 2 million.
- Abolition of the tax discounts for the husband/wife without their own income and child tax benefits for self-employed persons and persons with rental income applying any flat rate.
- Limitations on the application of the basic allowance for working pensioners.
- Increase of the withholding tax to 35 % of the income from sources on the territory of the Czech Republic of foreign tax residents (interests and royalties).
- Increase of real estate tax from 3 % to 4 %.
Within the government’s tax package were also agreed the widely discussed VAT rates which will increase by 1%, i.e. to 15 % and 21 %.
Technical amendment of VAT Act
Approved technical amendment of VAT Act includes the following changes:
- Changes in billing rules, tax documents requirements, issuance and storage of VAT documents, equalization of documents in paper and electronic form.
- Changes in the definition of the seat of the taxable person, VAT establishment of a supplier and recipient of supply.
- Use of exchange rates for conversion of foreign currency.
- Changes in the definition of taxpayers.
- Changes in the VAT treatment of real estates (introducing an option for a taxpayer to apply output VAT for the transfer of real estates even after the statutory deadline and extension of the deadline from three to five years).
- Changes in determining the place of supply for long-term lease of means of transport to non-taxable persons (place of supply determined by the seat or place of residence of the recipient of the supply).
- In combating the tax evasion the concept of so-called unreliable payer, the obligation to notify the tax administrator of taxpayers’ bank account used for economic activity and the related extended liability of the recipient of the supply for unpaid tax will be introduced.
- Changes covering administration of taxes (modification of taxable period, extension of the mandatory data to be included in the evidence for tax purposes).
- Changes in application of domestic reverse charge on services provided in connection with construction and assembly works.
- Taxation of advance payments for persons not keeping accounting.
- Changes in tax repairs for receivables from debtors in insolvency
Before above mentioned changes come into force, they have to be signed by the president.
Should you have any questions regarding tax changes, please do not hesitate to contact us.