Notification of the Finance Ministry06/09/10 / cata_tax-news

In connection with the floods in the Czech Republic in August 2010, the Ministry of Finance provided information pursuant to which tax administrators shall act helpfully and in mutual cooperation with individuals and legal entities affected by the floods or flooding. A prerequisite for such acting is that the tax subject shall inform the local financial office that the tax subject has been affected by the flood or flooding.

Taxpayers affected by the flood may ask their local tax administrator to wait for their payment of income tax or have such tax paid in installments. Upon request, the tax administrator may determine tax advances otherwise or entirely cancel such advances. Such individuals or legal entities will also be exempt from administrative fees connected with acts in tax proceedings. Financial donations and other gifts provided in connection with the floods shall also be exempt from the gift tax. Donations provided through donors’ SMS shall be exempt from VAT.

In the event that sanctions arise to a person affected by the floods due to their failure to pay taxes, such persons shall be excused in respect of such sanctions pursuant to instruction D-330. It is also possible to forgive entirely or partially inheritance tax, gift tax and real estate transfer tax on grounds of alleviating severity when resolving consequences of natural disasters. When resolving the consequences of natural disasters, the municipalities have the power to exempt tax payers from the real estate tax by a generally binding decree that shall take effect by no later than 31 March of the year following the taxation period in which the floods occurred. The exemption may be set for a maximum period of five years.

On 20 August 2010, the Ministry of Finance published the conditions under which it is possible to apply the value of donations provided to persons affected by the floods as a non-taxable part of the income tax base.