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Effective from 1 April 2019, an amendment to the Czech Income Taxes Act was introduced. This amendment imposes a new reporting duty for taxpayers, whereby income that is subject to withholding tax in the Czech Republic, now including income that is tax exempt or excluded from taxation in the Czech Republic according to the relevant double tax treaty, must be reported to the tax administrator.
Early last year we informed you about planned changes to the Council Directive on the common system of VAT (2006/112/EC). The proposed Council Directive (EU) 2018/1910 of 4 December 2018 amending Directive 2006/112/EC on VAT is currently in the interdepartmental comment procedure.
Czech Republic: exit tax rules enacted
Effective from 1 January 2020, the relocation of assets beyond the borders of the Czech Republic without a change of ownership (eg when a Czech tax resident transfers assets to its foreign permanent establishment or when a Czech tax resident changes its tax residence) will become subject to tax.
The new rules will apply for all relocations which occur after 1 January 2020. The movement of an asset will be taxed in the same way as the sale of the asset for its market value. The tax base will be calculated as the difference between the market value of the asset and its tax value.
This regulation also affects cases of cross-border mergers.
Partner, Tax Services
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