Recovery package

Jiří Šindelář
The Ministry of Finance has introduced amendments to the Income Tax Act, the Value Added Tax Act, and the Real Estate Tax Act.

Our lawmakers will not give us any rest even in the coming summer and are trying to keep us on our toes with the upcoming legislative changes. The Ministry of Finance has introduced an amendment to the Income Tax Act, the Value Added Tax Act (more on that in a future post in our newsletter), and an amendment to the Real Estate Tax Act, which this time will not just be clarifying, but we should see significant changes. Official information can also be found on the website of the Ministry of Finance of the Czech Republic, but the big question is how the relevant laws will be prepared and, most importantly, whether there will be any changes during the negotiations in the Chamber of Deputies. Perhaps the most significant change is the increase in the corporate income tax rate from the current 19% to 21%. Entrepreneurs will also certainly feel the introduction of the so-called limit for the purchase of passenger cars for business, and it should now be possible to apply only the "first" 2 million. CZK of the value of the car to tax costs. The government also wants to abolish the exemption of non-cash benefits to employees (on the grounds that this is a selective exemption), plus the exemption of so-called above-limit meal vouchers should also be abolished.

Other changes in the tax package include, for example, the abolition of the nursery tax credit, the abolition of the cold tax credit, and the reduction of the ability to claim the spouse's allowance. The change also provides that personal income tax rates will remain the same, however, the limit from which the higher tax rate will be applied will now be three times the average wage. It is also envisaged that the exemption limit for shares and securities will be set at CZK 40 million.

Changes are also planned in the area of real estate tax. The changes under discussion are to include the introduction of a so-called state coefficient, which would be an instrument that would allocate the additional revenue from this tax entirely to the state (not to the respective towns or municipalities). On the Ministry's website, model examples are given, where for an apartment with an area of about 70 square metres, the real estate tax in Prague is currently paid at the level of CZK 1,700 (after the increase it will be about CZK 2,500), or CZK 600 in Brno (after the increase CZK 1,200). The proposal also provides for the tax to be indexed to inflation.

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Jiri Sindelar
Jiří Šindelář
Tax Director

Tax advisory