Tax news Deloitte Czech Republic. January 2017

Transcription

1 Tax news Deloitte Czech Republic January 2017

2 Updated Information Regarding 2 Final debate in the Chamber of Deputies is likely to take place only in 2017 As we have informed you in the previous issue of dreport, the forthcoming amendment to the Income Taxes Act (included in the proposed tax package which was anticipated to take effect in 2017) was subject to numerous motions to amend. Ultimately, such motions and the related debate largely concerned the current hot issue of electronic sales records and making any changes therein before launching the next phase which is scheduled for 1 March Deputies only passed the shortening of the deadline for the third/ final reading of the tax package in the Chamber of Deputies and the schedule of passing proposed amendments. It is highly likely that the amendment to extend the effect of the Income Taxes Act, which was already anticipated to become operative from 1 January 2017, will be passed in the third reading. It is impossible to estimate the result of the voting on other proposed amendments. Nevertheless, despite the shortened deadline for the final third reading, the Chamber of Deputies may not have another session in 2016 and the voting on the tax package including proposed amendments will only take place at the beginning of If the amendment is passed in 2017, the numerous provisions will only take effect from the taxation period subsequent to the effective date, ie from 1 January 2018 for most payers. We will keep you updated in the next issue of dreport on further developments regarding the tax package. Watch our webcast to find out more details on this topic. Lucie Rytířová lrytirova@deloittece.com Alena Švecová alsvecova@deloittece.com Tereza Tomanová ttomanova@deloittece.com

3 Updates to the Combined 3 Changes for 2017 We are writing to inform you about the changes of combined nomenclature codes that shall become effective on 1 January The scope of the changes will be significant as 573 codes will be abolished and 687 new codes will be introduced as of 1 January In addition to changes in codes, changes in the text will also be introduced. As a result, situations will occur when the code will be preserved but its scope will change. Thus, even if a code is preserved, from 1 January 2017, it will be impossible to categorise certain products under it. The changes concern, for example: Agricultural products (fish, seafood, citrus fruits, rice, non-alcoholic beverages, certain wines etc.); Chemical products and pharmaceuticals (such as herbicides, insecticides, fertilisers, antiserums, immunological products or medicinal drugs nos and 3004); Wooden products (especially those made of tropical wood); Portable memory devices with/without recorded data (DVDs/CDs, flash/memory cards); Metal products; Machines (eg copy machines, printers) as well as textiles, monitors and vehicles. There are various reasons for these changes, ranging from an effort to monitor certain products of environmental importance and changes related to technological development and international trade requirements, to the need to simplify the categorisation of nomenclature codes. How Will this Affect You? Combined nomenclature codes are not only stated in the customs procedure but also in the Intrastat report or in other reports. It is therefore relevant to focus on the anticipated changes as soon as possible, ideally prior to the first import made in 2017 or prior to filing the first Intrastat report in which the new codes will already have to be respected. Timely update is the only way to avoid delays in customs procedures or the risk of filing the Intrastat report late.

4 4 Another possible effect of the changes may be that certain binding tariff information, which had classified certain goods under a given nomenclature code which is now subject to changes, will no longer be valid as of 1 January Practical experience shows that if given binding tariff information had been issued in the Czech Republic, the holder of such information will be informed of its loss of validity. However, in case the binding tariff information had been issued in other member states of the EU, we recommend that the holders of this information verify its validity, as not all EU customs administrations inform of this change. Are you at a loss as to how the changes will affect you? Are you in need of specialist assistance? Get in touch with us. We will assist you in updating the list of employed codes and will ascertain whether the other type of changes, in which the code is preserved but the text is changed, affects you or not. If such effects were identified, we would determine a new code corresponding to the new legislation as part of the review. Listen to more information on this topic in our webcast. Marek Fořt Tel: mfort@deloittece.com Petra Závalová Tel: pzavalova@deloittece.com Olga Kalousová Tel: okalousova@deloittece.com

5 Possibility of partial payment of an excess VAT deduction Will the tax administrator be obliged to return part of the retained excess VAT deduction before terminating the tax audit? In recent years, the Financial Administration of the Czech Republic has been notably enhancing its audit activity in the VAT area. Statistical data are connected thereto more than half of the tax audits and nearly three quarters of the procedures to remove doubts concerned the VAT in Auditing the tax obligation can have far-reaching consequences for a company. You may read the full article in the Legal part. 5

6 In Brief 6 VAT Act Amendment As part of the upcoming major technical amendment to the VAT Act, several proposed revisions have been submitted. One of them is the proposal to abolish Section 44 of the VAT Act (the possibility of correcting VAT in respect of uncollectible receivables), others included various changes in the VAT rates. The most significant revision stipulates the postponement of the amendment s effectiveness to 1 April A separate VAT Act amendment, which should reduce the VAT rate for newspapers and magazines as of 1 January 2017, has already been submitted to the Senate. Listen to more information on this topic in our webcast. The European Commission s Plans Regarding VAT The European Commission has unveiled its visions regarding the facilitation of VAT collection in relation to the online trade in goods. Businesses should have the possibility of declaring and paying VAT only in a single EU state (just as is the case with e-commerce in relation to services). Additionally, the Commission would like to make it possible for member states to reduce VAT rates for e-publications (electronic books and online newspapers). Other plans of the European Commission include changes in providing evidence for the exemption of the IC supplies of goods, with some notions aimed at changing the very substance of the current process of utilising IC supply exemptions and of the self-assessment of tax by the customer as part of the IC acquisition of goods. As our experience indicates, such extensive changes may take years to implement. C-432/15 Baštová Under this particular ruling, the Court of Justice of the European Union (the CJEU ) addressed the issue as to whether VAT applies to prize money. The Court ruled that it does not. Nevertheless, it acknowledged that race participants may, under certain conditions, make claims for input tax deductions (although output VAT will not be collected on the potential prize). Furthermore, the ruling provides an interesting description of the rules of applying a VAT rate in respect of what is referred to as single supplies.

7 7 C 564/15 Tibor Farkas Advocate General s View This particular dispute addresses the possibility of making a claim for a deduction of incorrectly invoiced tax (with the supplier utilising VAT for a supply to which the reverse charge mechanism should have been applied). The Advocate General s view is surprising in that it combines the customer s obligation to self-assess output VAT with the possibility of simultaneously making a claim for a deduction of the tax invoiced by the supplier. The question is what the CJEU s view of the matter will be. Radka Mašková rmaskova@deloittece.com Tomáš Brandejs tbrandejs@deloittece.com

8 EU News 8 Registration of Foreign Nationals prior to the Entry to the Schengen Area The EU is giving consideration to introducing the obligation to register for foreigners from non-eu countries prior to entering the Schengen Area In mid-november, the European Commission proposed introducing a registration system for tourists from countries with visa-free travel, for example citizens of the US or Japan. The purpose of the European Travel Information and Authorisation System (ETIAS) is to collect and analyse information about incoming foreign nationals, which should help improve the identification of security risks. At present, citizens of countries with visa-free travel can travel around the European Union (EU) practically without limits, but after the new system is established, they will have to fill in an electronic form prior to their travel to an EU country, specifying e.g. information about their health, stays in war zones or past criminal offences they may have committed. If all member states assess the information provided and approve the foreigner s entry, after an administrative fee of EUR 5 is paid ETIAS will issue an entry permit valid for 5 years. The plan for the establishment of the information system is yet to be approved by the member states and the European Parliament, but the Commission would like it to be launched in Visa-free Travel to the EU for Ukrainian Citizens Ukrainian citizens will be able to travel to the EU for short-term non-profit stays without a visa In November, the Slovak Presidency of the Union also announced that the member states had given their conditional approval of the cancellation of the visa requirements for Ukrainian citizens for short-term nonprofit visits of the EU territory. However, visa-free travel is to be introduced only after the EU accepts new rules that will allow visa-free travel to be subsequently restricted if necessary. Jana Pokorná jpokorna@deloittece.com Anastasia Verkhorubova averkhorubova@deloittece.com

9 Multilateral Convention to Implement Tax Treaty Related Measures 9 BEPS Action 15 On 24 November 2016, the OECD published the wording of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) (hereinafter the Convention and the Treaties ). The Convention is a very interesting instrument that will, in substance, represent an amendment to Treaties to be applied upon agreement of the contracting parties (ie jurisdictions). The Convention will not change the wording of the existing Treaties directly (as protocols do) but it will rather be applied in parallel with the Treaties and the modifying provisions will take precedence over the terms of the existing Treaties. As for the subject matter definition, the Convention predominantly contains the following rules (covering selected measures developed as part of 15 Actions of the BEPS project): Prevention of any abuse of the Treaties (for example to purposefully reduce the withholding tax rate); Expansion of the definition of a permanent establishment (such as explicit confirmation that entities/representatives acting based on commission or other agreements in their states may trigger that a permanent establishment of a foreign taxpayer arises); Mutual agreement procedure (between contracting jurisdictions) and inclusion of arbitration in case the contracting jurisdictions fail to come to an agreement; and Prevention of hybrid mismatches in terms of entity qualification (transparent versus non-transparent). However, the Convention represents a comprehensive set of provisions allowing states to make a selection from the proposed alternatives. As the case may be, they may decide to what state the proposed adjustments will be applied and, once again, it is at the states discretion whether they will apply the adjustments in full, in part or not at all. For this reason, a very interesting negotiation and approval/ratification process may be expected in individual contracting jurisdictions because despite the multilateral nature of the Convention, modifications of Treaties will have to be agreed bilaterally, at the level of individual states.

10 10 The Convention contains rather complicated provisions on effective dates to be applied to jurisdictions that will undergo the relevant process. The effective date may be expected on 1 January 2018 at the earliest, given the demands of the entire process, the Convention should be expected to (gradually) become effective in the following years. Roman Ženatý rzenaty@deloittece.com Tereza Tomanová ttomanova@deloittece.com

11 In Brief 11 BEPS CbC reporting European Union an unofficial opinion of the EU Council Legal Service has been released, stating that the European Commission s country-by-country (CbC) reporting proposal relates to fiscal provisions and hence requires unanimous consent from EU Member States. The commission had considered the proposal to be accounting legislation. Netherlands Dutch members of a multinational group have until 1 September 2017 to make the notification as to whether or not they are a reporting entity for CbC purposes and if not, which entity is. This takes account of the fact that at the time the first notifications from taxpayers are due, it will not be clear with which countries an agreement to exchange CbC information exists, which is important in determining the reporting entity. Other Belgian parliament adopts bill on EU directive, exit tax The bill implements the parent-subsidiary directive changes retroactively from 1 January 2016 and amends the exit tax regime from assessment year EU Parliament approves automatic bank data exchange The European Parliament has overwhelmingly approved legislation that would allow tax authorities across the EU to automatically share bank information with other Member States and to implement registers recording the beneficial ownership of companies and trusts. AG opinion in Belgian fairness tax case Advocate General (AG) Kokott of the Court of Justice of the European Union (CJEU) has issued her opinion on the compatibility of the Belgian fairness tax with primary and secondary EU law. The tax is levied at 5.15% (5% plus a 3% crisis surcharge) on resident and non-resident companies in relation to profits distributed by way of dividends which were not taxed due to the reduction of the company s tax base through the notional interest deduction and/or the use of tax loss carryforwards. The decision of the CJEU is awaited. France to broaden scope of exemption from 3% surtax The French government has decided to maintain the exemption from the 3% surtax for dividends distributed between members of a French tax-consolidated group, and to broaden the scope of the exemption from 1 January 2017 to include distributions made by French subsidiaries to their foreign parent companies, provided a 95% ownership requirement is met.

12 12 Hungary announces corporate tax rate reduction A flat 9% corporation tax rate will apply from 1 January Luxembourg will not participate in FTT initiative Luxembourg s Minister of Finance has confirmed that Luxembourg will not participate in the initiative on the introduction of a Financial Transaction Tax. Dutch AG issues opinion on dividend WHT refunds The Advocate General (AG) to the Dutch Supreme Court has advised the court to refer two cases involving the compatibility of the Dutch dividend withholding tax (WHT) with EU law to the CJEU, for practical and procedural reasons. Many similar cases are pending in the Netherlands and a final CJEU decision could be the only practical solution to end the debate on the issue. Slovenia corporate income tax law changes gazetted Measures include an increase in the corporate income tax rate from 17% to 19% from 1 January Swedish ruling on group loss relief on liquidation of indirectly held subsidiary A Swedish company was entitled to claim relief under the group relief regime for final loses that could not otherwise be relieved incurred on the liquidation of an indirectly held foreign subsidiary. Roman Ženatý rzenaty@deloittece.com Tereza Tomanová ttomanova@deloittece.com

13 Tax liabilities January Monday 9 Consumption tax tax maturity for November 2016 (except the consumption tax on alcohol) Friday 13 Intrastat the Intrastat statement for December 2016, paper version Tuesday 17 Intrastat the Intrastat statement for December 2016, digital version Friday 20 Income tax monthly payment of deducted advance payments on personal income tax from employment Wednesday 25 Value added tax tax return and tax for 4 quarter and for December 2016 Energy taxes Consumption tax recapitulative statement for 4 quarter and for December 2016 VAT control statement for 4 quarter and for December 2016 tax return and tax maturity on gas, solid fuels and electricity for December 2016 tax maturity for November 2016 (only the consumption tax on alcohol) tax return for December 2016 tax return for claiming of refund of consumption tax for example on fuel oil and other petrol (benzine) for December 2016 (if applicable) Tuesday 31 Biofuel return according to Section 19 (9) of Act No. 201/2012 Coll. Road tax Real Estate tax Income tax tax return and tax for 2016 tax return (full) or partial tax return for 2017 payment of withholding tax according to the special rate for December 2016

14 Tax liabilities February Thursday 9 Consumption tax tax maturity for December 2016 (except the consumption tax on alcohol) Tuesday 14 Intrastat submission of statements for intrastat for January 2017, paper form Wednesday 15 Income tax Taxpayers to sign annual tax settlement on employment and fringe benefits for 2017 tax year and the annual settlement advance tax and tax relief for 2016 tax year application for the annual tax settlement Thursday 16 Intrastat the Intrastat statement for January 2017, electronic version Monday 20 Income tax monthly payment of deducted advance payments on personal income tax from employment Friday 24 Consumption tax tax maturity for December 2016 (only the consumption tax on alcohol) Monday 27 Value added tax tax return and tax for January 2017 Energy taxes Consumption tax recapitulative statement for January 2017 VAT control statement for January 2017 tax return and tax maturity on gas, solid fuels and electricity for January 2017 tax return for January 2017 tax return for claiming of refund of consumption tax for example on fuel oil and other petrol (benzine) for January 2017 (if applicable)

15 Contacts If you have any questions concerning the items in this publication, please contact your regular Deloitte Tax contact or one of the following experts: Jaroslav Škvrna Zbyněk Brtinský Miroslav Svoboda Marek Romancov LaDana Edwards Tomas Seidl Adham Hafoudh Radka Mašková Local Sales / Purchases Report Jaroslav Beneš jbenes@deloittece.com Deloitte Advisory s.r.o. Nile House, Karolinská 654/2, Praha 8 - Karlín, Czech Republic Tel.: Subscribe to dreport and other newsletters and invitations here Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Deloitte provides audit, tax, consulting, financial advisory and legal services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte s more than 225,000 professionals are committed to becoming the standard of excellence Deloitte Czech Republic