Tax Newsletter - Archive
Forvis Mazars Tax View - archive of tax articles
Change in the Process for Reporting Posted Workers to the Czech Labour Office
A requirement for EU companies to report the posting of foreign employees to the Czech Republic in the context of the transnational provision of services has existed for many years in the Czech Republic. This reporting is important as it allows the Czech Labour Office to monitor compliance with labor standards, prevent “social dumping“ from countries with lower level of employee labour law rights, and ensure that posted workers receive fair treatment comparable to local workers.
Early retirements and further tightening from October 2024
From October 2024, another change in the area of early pensions, which was introduced by Act No. 270/2023 Coll., amending Act No. 155/1995 Coll., on pension insurance, will enter into force.
Establishment of a holding structure – abuse of law
The Supreme Administrative Court (SAC) established breakthrough case law on the assessment of holding structures, describing and defining the economic, legal, and business reasons for establishing a holding structure in the context of pre-existing concept of abuse of law. Furthermore, it established the tax authority‘s obligation to prove that the predominant purpose of the transaction is to achieve a tax advantage when assessing an abuse of law.
Amendment to the VAT Act 2025
Like every year, this year too, it is necessary to prepare for the amendment to the VAT Act (Parliamentary Document No. 726), which will bring a number of changes with effect from 1 January 2025. Compared to the last year, when the amendment concerned mainly VAT rates, there should now be minimal changes in the area of VAT rates.
Significant changes proposed related to employment of foreigners in the Czech Republic
The Czech Ministry of Labor and Social Affairs has put forward draft legislation which would make it much easier for Czech companies to employ foreigners from several countries outside of the European Union.
Technical Amendment to the Consolidation Package
Non-Monetary Contributions to Companies Back in the Spotlight (Application of VAT in Barter Transactions)
The Court of Justice of the European Union (hereinafter ’CJEU’), in its recent ruling C-241/23 P. sp. z o.o. (hereinafter the ’Ruling’), addressed the application of VAT in the case of non-monetary contributions to a company’s share capital for which the contributor received newly issued shares. This Ruling is highly significant in the Czech Republic as it alters some of the established interpretations of VAT.
Changes in the application of the arm’s length principle for marketing and distribution companies
In February 2024, the OECD published its final report on Pillar 1 - Amount B (hereinafter the “Report”), the overall aim of which is to simplify and streamline the application of the arm’s length principle for companies carrying out basic marketing and distribution activities.
Transfer pricing audits from the perspective of the Financial Administration
At the end of March, the Financial Administration published a press release on tax audits focused on transfer pricing (available HERE in Czech). Not only do the figures on the number of transfer pricing audits carried out and the related tax assessed in 2023 confirm the Financial Administration’s continued interest in this area, the Financial Administration itself states that it is aware of the potential that additional taxation related to transfer pricing represents for the state budget.
Change in the Taxation of Employee Stock and Option Plans
On 1 January 2024, an amendment to the Income Tax Act came into effect, significantly adjusting taxable moment of income from employee stock and option plans. The amendment brings a variety of interpretative and practical uncertainties, among which stands out the different treatment in the tax area comparing to legislative regulation of social and health insurance contributions.