What is new in tax and related laws from January

Lex Ukraine

On 21 March, three new laws (known as Lex Ukraine) came into force, by which the government is responding to the arrival of refugees from Ukraine. 

Temporary protection in the Czech Republic

Act No. 65/2022 Coll., on Certain Measures in Connection with the Armed Conflict in Ukraine, incorporated the Council of EU decision of 4 March 2022 and particularly regulates the conditions for granting “temporary protection” to foreigners who come to the Czech Republic in connection with the conflict in Ukraine. The law defines the circle of people to whom temporary protection can be granted, namely nationals of Ukraine and their family members who resided in Ukraine before 24 February 2022. 

A person who has been granted temporary protection shall, for the purposes of the Foreign National’s Residence Act, be considered to be a holder of a long-term visa for the purpose of tolerating their residence. Furthermore, this law defines “special rules” for the provision of health care and grants foreigners enjoying temporary protection the status of holders of public health insurance. 

Employment and social security

According to Act No. 66/2022 Coll., on Measures in the Field of Employment and Social Security in Connection with the Conflict in Ukraine, a foreigner with temporary protection is considered to be a foreigner with authorised permanent residence. All temporary protection holders have thus gained free access to the labour market and thus do not have to apply for a work permit, a blue card or an employee card. At the same time, it grants foreigners with temporary protection a humanitarian benefit of CZK 5000, which is paid by the competent regional office of the Labour Office of the Czech Republic.

Measures in the field of education

Act No. 67/2022 Coll., on Measures in the Field of Education in Connection with the Armed Conflict in Ukraine, regulates in particular the access of children of refugees to schools and children’s groups and related issues. The law specifies the conditions under which the educational programmes for individual students can be adapted, as well as the possibility of accepting new students. 

All three laws expire on 31 March 2023 and are likely to be subject to partial modifications according to the current situation, of which we will continue to inform you. 

Partial abolition of road tax 

On 24 March 2022, the obligation to pay advances on the road tax in 2022 was abolished on the basis of the General Pardon of the Minister of Finance and on 8 June 2022 a fundamental amendment to the Road Tax Act was published under No. 142/2022 Coll., which cancels the road tax on passenger cars and buses. Now only category N2 and N3 lorries and their trailers of categories O3 and O4 will be subject to the road tax. Lorries with a maximum weight of over 3.5 tons and trailers of lorries over 3.5 tons remain subject to the tax, though for some a zero tax has now been set. In fact, the road tax for 2022 will only be paid by operators of heavy lorries, for which there has been a relatively significant decrease in the tax obligation, and by trailers with the largest permissible weight of 12 tons and semi-trailers, where the taxation concept has changed. The age of the vehicles is no longer taken into account, the tax is paid only once a year and the tax return only lists those vehicles on which the tax is paid. 

Separate tax law to support Ukraine 

On 28.5.2022, Act No. 128/2022 Coll., on Measures in the Field of Taxation in Connection with the Armed Conflict on the Territory of Ukraine caused by the Invasion of the Troops of the Russian Federation took effect. This new law particularly contains the effects of related gratuitous transactions in the area of income tax. We present the most important points below: 

• the temporary increase in the limit for deduction of gifts to up to 30% of the tax base is extended also for the tax period of the calendar year 2022 for natural persons and for tax periods ending from 1.3.2022 to 28.2.2023 for legal entities,
• the circle of gratuitous fulfilment that can be deducted from the tax base is expanded. The value of the gratuitous fulfilment in support of Ukraine’s defence efforts (e.g., the provision of military material), which did not meet the conditions for deduction from the tax base according to the current wording of the Income Tax Act, can now be deducted, 
• the range of beneficiaries for which the possibility to deduct from the tax base the expenditures on fulfilment provided to them free of charge in 2022 is expanded. Now fulfilment provided to the country of Ukraine, its territorial administrative offices, legal entities and natural persons with their seat or residing in the territory of the country of Ukraine in connection with armed conflict can also be deducted from the tax base,
• the income of an employee in the form of accommodation provided in the 2022 tax year shall be exempt from personal income tax if it is provided by the employer to the employee and his/her family members with their residence in the country of Ukraine on the ground that these family members have left the country of Ukraine in connection with the armed conflict in its territory. The exemption shall apply for the 2022 tax year.
• a tax exemption is extended to gratuitous income provided in 2022 to support the defence efforts of the country of Ukraine. 

If you have any questions about the aforementioned information, please do not hesitate to contact our experts who are ready to discuss your situation in more detail with you.

Gabriela Ivanco, Tax Manager

Anna Klímová, Tax Senior