2020 Czech Tax Code amendment – summary of the current situation

At the end of 2019, it seemed the amended Tax Code would come into effect on 1 May or 1 June 2020, as appropriate. However, it is now clear that its effect has been postponed indefinitely.

The original proposal for the Tax Code amendment, drafted by the Ministry of Finance, which was covered in our bnt Journal in December, was not approved by the Chamber of Deputies. The Finance Minister thus presented the proposal to the Chamber of Deputies again at the end of April 2020 (Chamber of Deputies Papers No. 841). The amendment will bring both positive and negative changes. For example, we can look forward to lower penalty interest or prefilled tax returns that will contain data obtained by tax authorities in the course of previous tax procedures. Moreover, it will be easier to check the balance of personal tax accounts. However, the amendment includes a number of changes that are less positive for taxpayers (e.g. it introduces the possibility to commence and end tax inspections by correspondence, without taxpayers’ physical presence).

For the time being, the five-day “grace period” for submitting tax returns still exists. Until the effective date of the amendment, if a tax return is submitted late (with up to 5 workdays tolerated) or tax is paid late (with up to 4 workdays tolerated), a taxpayer will not pay any sanctions.

Please note that the amendment changes the construction regarding time extensions for submitting tax returns in connection with taxes assessed for a tax year – specifically to 4 months from the end of a tax year in case of electronic submissions. Tax returns must presently be submitted within 3 months after a tax year ends. If submitted by tax advisors or in case of audited taxpayers, tax returns must still be filed within 6 months from the end of a tax year. However, it will no longer be possible to submit a power of attorney to tax authorities before the end of a non-extended deadline.

Finally, we wish to draw your attention to an amendment already added to the government proposal by Deputy Jan Hrnčíř that concerns an increase of the turnover threshold for compulsory VAT registration. The amendment increases the turnover threshold for taxpayers’ compulsory VAT registration from CZK 1 million to CZK 1.2 million. The proposed amendment aims to reduce bureaucracy and VAT administration cost for small businesses and companies. Moreover, it brings the limit closer to that of neighbouring countries, such as Slovakia or Poland.

Chamber of Deputies Papers No. 841 that amend Act No. 280/2009 Coll., the Tax Code, as amended, and other related acts


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