The ongoing pandemic has impact also on the world of taxes. The virus is behind the rather bewildering variety of new tax breaks that have been created, and it has even effects on cross-border transactions – though this is a topic for another time. Today, we shall have a look at the latest tax news on the domestic turf, to keep you abreast of the development in this country.
Effective as of 1 January 2021, a new concept was introduced: the per diem meal allowance – a deductible benefit granted by employers toward meals bought by their employees. On the part of the employee, this benefit is exempt from income tax, social security payments, and health insurance contributions, up to an amount of 70% of the maximum meal allowance for business trips with a duration of 5-12 hours – for 2021, this translates into an amount of CZK 75.60. Employees become entitled to this benefit if they worked for at least three hours on a given day.
Effective as of 4 February 2021, the deductibility limit for donations has been temporarily increased to 30% of the tax assessment base for the assessment periods 2020 and 2021 (in the case of natural persons) or, as it were, assessment periods ending within the period from 1 March 2020 through 28 February 2022 (in the case of legal persons).
Effective as of 1 January 2021, changes have been made to the Income Tax Act so as to expand the obligation to file a report on income payments to persons abroad, which newly also applies to income from which no tax is being withheld (because of the applicability of a double taxation treaty, or because of an exemption from withholding tax). The limit for payments made to suppliers, previously at CZK 100,000, has been lifted to CZK 300,000. The tax return for tax-exempt income and for income which is not being taxed in Czechia on the basis of a double taxation treaty shall newly be filed on an annual basis, by 31 January of the calendar year following the year in which the duty to withhold tax arose, to the extent that such income would be subject to tax in the Czech Republic. The monthly reporting of income which is subject to withholding tax and which is transferred abroad remains unaffected by these legislative changes.
Following the amendment of the VAT Act’s provisions on the lease of real estate, the General Financial Directorate has issued a Memorandum on the application of value-added tax on property leases after 1 January 2021: https://www.financnisprava.cz/cs/dane/dane/dan-z-pridane-hodnoty/informace-stanoviska-a-sdeleni/info-DPH-u-najmu-NV-2021
In connection with the amendments to the VAT Act and the General Fiscal Code which have come into force as of 1 January 2021, the General Financial Directorate has updated its Memorandum on registration as a VAT payer:
Income Tax Act (Act No. 586/1992 Coll., in the wording in force as of 1 January 2021)