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International Tax Newsletter - Summer 2011 - CZECH REPUBLIC: Corporate Tax Legislation

  • Tax rate on corporate income is 19% in 2011; tax rate for investment funds is 5%.
  • New regulations apply to depreciation of photovoltaic solar power plants.
  • Czech companies in liquidation are not allowed to pay dividends tax-free to a parent company in the EU, but tax needs to be witheld according to any double tax treaty between the Czech Republic and the parent's country.

ADMINISTRATION OF TAXES

A completely new Act for the administration of taxes was introduced on 1 January 2011, including new terminology in tax administration, new regulations for the execution of tax and changes in deadlines.

VALUE ADDED TAX (VAT) REGIME

A number of amendments were made to the VAT regime effective 1 April 2011.

REVERSE CHARGE TO THE RECIPIENT

In accordance with Article 199 of the EU VAT Directive, certain supplies are subject to a reverse mechanism whereby the customer, not the supplier, accounts for VAT. After the amendment becomes effective, this scheme will be used for new supplies of gold and also the supply of scrap and waste, including processing and trading of greenhouse gas emissions. This scheme will also apply to construction and assembly work from 1 January 2012. The scheme applies to supplies made between payers in the country.

VAT RECLAIM

Based on established jurisprudence of the EU Court of Justice and EU Directives, when customers reclaim VAT based on prior suppliers' VAT, they are responsible for:

  • Using the correct tax rate on the invoice
  • Payment of VAT by the supplier
  • Checking that the supplier is a registered VAT payer
  • Including all required information on the invoice
  • Ensuring that they only reclaim from invoices received during the VAT period relating the VAT return.


TAX CLAIMS AGAINST DEBTORS IN INSOLVENCY PROCEEDINGS 

A new provision allows taxpayers under statutory conditions to make tax claims against debtors in insolvency proceedings.

EXEMPTION FROM TAX ON IMPORT OF GOODS

There has been a tightening of conditions for tax exemption on the import of goods, if the goods are subsequently delivered to a different EU Member State from the one in which the original importation of goods was made.

GROUP REGISTRATION

Changes in 2010 and 2011 in the provisions relating to registration of a group, changes are discussed in a release by the Ministry of Finance.

International Tax Newsletter - Summer 2011

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