Changes in turnover definition, travel allowances and Intrastat limits

Change in the definition of turnover.

In addition to tax changes, the consolidation package also brought innovations in the area of accounting. One of the significant changes is the definition of a company's net turnover, with implications for the categorisation of an entity and for the determination of audit obligations.

Since the new year, companies calculate their net turnover differently than they did before. Whereas previously it was calculated as the amount of total revenue less sales discounts, it will now only include revenue from the sale of products and goods and the provision of services for accounting purposes. It will therefore only be the revenue on which the company's business model is based, not extraordinary revenue.

The net turnover from the accounting point of view was therefore the sum of all revenue accounts (6xx). However, for accounting purposes, net turnover will now include only revenue from the sale of goods and services (i.e. accounts 601, 602 and 604). It will no longer include other/extraordinary income (i.e. accounts 648) or foreign exchange gains (i.e. 663).

But it should also be added that in determining the revenue to be included, particular account will be taken of the industry and market in which the entity operates and the nature of the entity's business, i.e. if certain other revenue accounts in classes 64x and 66x will be included in the company's core business, they will also need to be included in net sales.

It follows from the above that it will not be sufficient to track turnover only in the 60x accounts, but the entity will need to include all relevant revenue accounts, although a substantial part should be in the 60x accounts. To make the determination of net turnover easier and clearer, it will be advisable to keep these revenues in separate analytical accounts, which is highly recommended as from 1 January 2024.

The entity is likely to be required to disclose how it calculates its net turnover in the notes to the 2024 financial statements.

Net turnover will continue to be the criterion for determining the categorisation of an entity and for determining the audit obligation.

This change will therefore fundamentally affect the obligation of an entity to have its accounts audited by an auditor. One of the criteria for the mandatory audit is the net turnover and exceeding the limit of 80 million CZK for two consecutive accounting periods. Since the determination of turnover after the amendment will generally result in a reduction of net turnover (due to the inclusion of only part of the revenues), many accounting units will no longer meet the criteria for mandatory audit.

The calculation of net turnover has been introduced prospectively, i.e. the turnover already determined for the previous period will not be recalculated. To assess compliance with the criteria, the turnover for 2023 will be compared under the old methodology and the turnover for 2024 under the new methodology, i.e. the turnover for 2023 will be calculated according to the existing rules and therefore the above criterion for determining the audit obligation will change only for the financial year 2024.

Travel allowances and home-office

Furthermore, we would also like to inform you that on 27 December 2023, Decree of the Ministry of Labor and Social Affairs No. 398/2023 Coll. was published in the collection of laws, which updates the rates of the domestic meal allowance and compensation for the use of a private car for business trips for the year 2024.

Meal allowances rates for domestic business trips:

• 140 CZK - 166 CZK for a business trip of 5-12 hours
• 212 CZK - 256 CZK for a business trip of 12-18 hours
• 333 CZK - 398 CZK for a business trip longer than 18 hours

Basic reimbursement per kilometer driven:

• Single- and three-wheel vehicles – CZK 1.50
• Passenger vehicles – CZK 5.60

Fuel reimbursements:

• Petrol 95 – CZK 38.20 per liter
• Petrol 98 – CZK 42.60 per liter
• Diesel fuel – CZK 38.70 per liter
• Electricity – CZK 7.70 per kWh

Another issued decree can be found under number 341/2023 Coll., determining the amount of foreign meal allowance for the year 2024. An overview of rates for individual states can be found under the following link. Changes have occurred in the following states: Andorra, Hungary, Latvia, Liechtenstein, Luxembourg, Norway, Spain and Sweden.

Further, Decree No. 397/2023 Coll. reduces compensation for the home office since 1 January 2024 from CZK 4.60 to CZK 4.50 per hour.

Intrastat

In conclusion, we would like to mention that as of 1 January 2024, the limit for reporting obligations in the Intrastat area was increased from CZK 12 million to CZK 15 million. The aim of increasing the limit is to reduce the administrative burden of smaller companies due to the increase in the price level.

At the same time, the limit of the so-called simplified reporting was increased from CZK 20 million to CZK 30 million.