The government approved tax mitigation measures related to the effects of government measures - UPDATE1
The Czech Ministry of Finance has expanded the scope of parties which are subject to the tax relief of 14 October 2020 that relates to the ban on certain operations due to the current epidemiological situation and the growing spread of coronavirus. We previously outlined these measures in greater detail HERE. Who does the tax relief benefit?
According to the current measures, the tax relief listed below can also be used by businesses which provide services or are engaged in retail sales in establishments affected by the government’s emergency measures that ban or restrict certain operations, with the exception of operations that continue to be allowed after 22 October 2020. The condition is that the income from such operations must have comprised the majority of the business’s total income (meaning income from employment, business, income from capital assets and rental income) between 1 June 2020 to 30 September 2020.
Decisions to apply for the tax relief must be notified to the tax authority. The form of notification is the same as in the case of applications for the compensation bonus. Businesses can send a signed notification to the tax authority electronically by e-mail. The notification form is already available on the tax authority’s website here, and instructions that provide more details on the operations subject to the measure are available here. At the same time, the tax authority recommends that notifications be filed no later than on the day the VAT tax return is filed or by the due date of the road tax or income tax advances that have been exempted.
If the conditions outlined above are met, the Ministry of Finance shall provide the following relief:
1. Postponement of VAT payment
The Ministry of Finance releases businesses from the duty to pay default interest on late payments of VAT for September 2020, October 2020 and November 2020 or for the 3rd quarter of 2020, but only on condition that the tax will be paid to the tax authority’s account by 31 December 2020. The VAT payment for the periods referred to above is therefore actually postponed until the end of 2020. However, we would like to point out that tax returns and VAT status reports must be submitted by the standard deadlines; the release only applies to the tax payment itself.
2. Release from the duty to pay personal and corporate income tax advances
The release applies to advances due between 15 October 2020 and 15 December 2020, which business that are eligible for the relief do not have to pay. The measure has no effect on the tax liability; the aim is only to bridge the temporary lack of funds and to postpone the payment.
3. Release from the duty to pay road tax advances
The road tax advance payment release applies to all advances which fall due in 2020.
Furthermore, we would like to reiterate that parties that are not automatically subject to the tax relief outlined above but are, nevertheless, affected by the government bans, may apply for tax relief individually with their tax authorities. At the same time, the release from the duty to pay administrative fees for submitted applications introduced by the Ministry of Finance as part of the spring mitigation measures continues to apply.
For the sake of completeness, we add that, in addition to the new measures, income tax payers can use the previously approved tax loss carry-back option, which we have previously addressed in greater detail here.