Notification of the Finance Ministry

• Notification of the Finance Ministry dated 2 December 2008 on classification of tangible assets into depreciation groups pursuant to Annex 1 to Act No. 586/1992, Coll., on Income Tax, as amended, after 1 January 2008

Classification of movable tangible assets into depreciation groups will be carried out after 1 January 2008 in compliance with the Standard Classification of Production (introduced by the Czech Statistical Office in its notification dated 5 December 2002 on introduction of the 2nd edition of Standard Classification of Production) set out in Annex 1 to Act No. 586/1992, Coll., on Income Tax, as amended, under the designation ++).

The Notification of the Czech Statistical Office dated 31 July 2008 sets forth the new Production Classification (CZ-CPA) can be applied retroactively from 1 January 2008 for statistical purposes, but it is not decisive for classification of tangible assets into depreciation groups.

• Decree sets foreign meal allowances for 2009

The Finance Ministry (“MoF”) issued Decree No. 417/2008, Coll., setting forth the basic amount of foreign meal allowances for 2009. The Decree becomes effective as of 1 January 2009 and Decree No. 338/2007, Coll., setting forth the basic amount of foreign meal allowances for 2008, will be cancelled simultaneously.

• Information on application of the provisions of Section 36, subsection 11 of the VAT Act

Effective 1 January 2009, the new subsection 11 will be added to the VAT Act, which sets forth what received amount shall not be included in the tax base.

The new legal regulation sets forth that an amount received from and paid by another that is not to be included in the tax base must be received on behalf and account of this other party. The new legal regulation determines that the amount received from and paid by another person that is not to be included in the tax base must be received on behalf and account of this other person. According to the MoF’s interpretation, the new regulation shall be applied to events where the received and paid amount was an interim item for the payer. In case of lease agreements, the MoF does not mention that it is necessary to fulfill the basic legal condition, namely the receipt of the amount on behalf and account of another person. The information implies that such condition need not be fulfilled in case of lease agreements. It is known that the MoF employees present opinions at trainings that the legal condition need not be fulfilled in case of lease agreements. It is therefore a question how administrative authorities will respond, in practice, to the above information and whether financial offices will strictly request fulfillment of the legal condition that amounts not included in the tax base be incurred on behalf and account of another person.