Tax news. March Deloitte Czech Republic

Transcription

1 March Tax news Deloitte Czech Republic

2 March Transfer Pricing and Supervision The Czech tax administration considers transfer pricing to be a field of vital importance in collecting income taxes, especially regarding corporate entities which are part of multinational groups. The attention that has been given to this area to date proves its importance and a more-intensive analytical attitude is therefore expected going forward. The tax administration regularly evaluates the previous experience and is working to develop a methodology for the targeted assessment of the information that is already available, with a focus on probing into areas where there is a high likelihood of the tax base being misstated. According to recent public statements of tax administration officers, it is necessary not only to improve efficiency, but also to consider broadening the reporting obligations of tax entities. Owing to the dynamics of business, the dynamics of tax inspections also lead to constant procedural adjustments and refinements. It is therefore clear that the situation will not be stabilised as a result of the implementation of one specific measure. The likely scheme is that the area of transfer pricing will be under the tax administration s permanent scrutiny, only the amount and the precision of the questions will be on the rise. The situation calls for the constant assessment of the latest inspection findings and for related discussions with the tax administration, the objective being the need to strike a balance between the complexity of documentation requirements and the success of inspections when assisting our clients. 2

3 March The Impact of the New Civil Code The new Civil Code and the Business Corporations Act have changed many an institute of private law. The tax regulations have attempted to reflect and incorporate these changes with questionable results. The interpretation and practical application of the incorporated regulations remain unclear not only for taxpayers, but also for the tax administration itself, which is now facing the major challenge of adapting the existing procedures to suit the new codes. All this in a situation when not even the authors of the new regulations, the judges or legal specialists know exactly what course of action to take in disputable cases. The following topics remain unclear from a tax assessment point of view: Trust funds: a new element in the Czech legislation, representing nobody s property; problematic areas: the taxation of the investment and payments from the funds in some cases, acting on behalf of the trust fund, depreciation, relationship to similar institutes abroad etc (at present, two major contributions on this subject are being discussed between the Chamber of Tax Advisors and the General Financial Directorate); Immovable property and property law: gradual clarification of the tax treatment of the wholly-new construction right and of the term temporary construction, and others (these will also be subject to extensive debate between the Chamber of Tax Advisors and the General Financial Directorate); The cancelling of gift and inheritance tax and the introduction of income tax on free-of-charge income ; New possibilities in corporate governance: for example, tax regulations will need to deal with the remuneration of a natural person representing a corporate entity that is a statutory body or a member of the statutory body of a different company; it is also necessary to confirm the taxation of advances made on a profit share, of profit paid to persons other than partners etc. Finding answers to these and many other open questions will be a matter of months, possibly years. What is important for taxpayers now is to know the current legal interpretations and the current approach of the tax administration. We are therefore keeping a close eye on these issues and bringing our clients the newest findings on the interpretation of the law and the practical implications so that we are able to rule out any risks arising from applying the incorrect solutions. 3

4 March The Most Recent FATCA The end of the last year and the beginning of the new has brought about some changes in the developments around the US FATCA (Foreign Account Tax Compliance Act). In this brief summary, we inform you of the most important ones. The FATCA obliges financial institutions outside the US to provide information on American clients accounts to the American tax administrator. New IGAs (Intergovernmental Agreements) have been concluded between the US and the following countries: the Netherlands, Crown dependencies (Jersey, Guernsey and the Isle of Man), Malta, Bermuda, Canada, Mauritius, Hungary, and Italy. The aim of these agreements is cross-border cooperation in providing information on the accounts of Americans living abroad. As the entry into force of the FATCA draws near, more such IGAs are likely to be signed. As a result of the initiative of which we informed you in the January issue of dreport, the OECD issued some documents in mid-february having the aim of setting a common reporting standard for the exchange of tax information based on data from financial institutions. These documents are the Model Competent Authority Agreement (CAA) and the Common Reporting Standard and Due Diligence for Financial Account Information (CRS). Although the CRS draws its inspiration, to a large extent, from the FATCA, we can still find some differences. For example, the CRS does not stipulate a withholding tax obligation, only reporting obligations for financial institutions. Last but not least, we would like to inform you that the draft agreement between the Czech Republic and the US to improve International Tax Compliance (ie the IGA between the Czech Republic and the United States) is currently undergoing external consultation and awaiting the approval of the Government of the Czech Republic. According to this draft agreement, the Czech Republic should not start reporting until 2016, when, however, it will have to report retrospectively for as well. We will keep you updated on any further developments in the next issues of dreport. 4

5 March Draft Amendment to the VAT Act (Cancelling the Five-Year Period for A group of MPs is proposing to fully exempt plots of land underlying new buildings from VAT by cancelling the five-year period after which it is possible to benefit from the tax exemption. Information of the General Obligatory E-Filing Starting with January The GFD specifies that the obligation to submit VAT returns and VAT registration forms, and to report changes in the taxpayer s registration data in an electronic form also applies to tax returns relating to the taxation period before January. We call attention to the fact that especially submitting VAT registration forms in an electronic form may present practical problems. The GFD also names other possibilities of e-filing and also brings attention to the fact that it is still possible to submit the forms in other than electronic form for some natural persons. The GFD gives a detailed description of the conditions that need to be met here (for example, the natural person cannot have an obligation to submit VAT records of the local reverse charge supplies, or one with an obligation to file an EC sales list), and furthermore provides details on how the fulfilment of these conditions should be tested in the case of the partners of a company (using the terminology of the previous civil law regulation, the members of an association ). However, the proposal also concerns the five-year period related to buildings and is incompatible with the EU VAT Directive (for several reasons). It is therefore not likely that the draft amendment will be passed. The Entitlement to a Tax Deduction for Photovoltaic Power Plants (PVPP) The GFD also provides detailed information on the use of PVPPs for purposes unrelated to economic activity, ie on the adjustment of the tax deduction and on the application of output tax. It notes, inter alia, that since 1 January 2013 the green bonus has not presented a payment for supply and through classifying the PVPPs into ones that were set up before 31 March 2011 and after 1 April 2011 (the deduction adjustment treatment changed as of this date), it gives examples to illustrate the application of output VAT and any possible changes in input deductions. 5

6 March Rulings of the Court of Justice C-300/12 Ibero Tours GmbH Ibero Tours mediated tours and holidays for a travel agency in return for a payment. It collected money paid by clients for the tour in the name of the travel agency and sent it to the travel agency s account. With the aim of enhancing tour sales and receiving a higher remuneration from the travel agency, it charged the clients less than it actually sent to the travel agency s account. Ibero Tours intended to compensate its losses with the mediation remuneration from the travel agency in order to pay lower VAT from the remuneration. According to the CJEU, such treatment is unacceptable; the mediator s remuneration is subject to the VAT in full amount. C-424/12 SC Fatorie The supplier issued an invoice for delivering construction work in Romania. However, the billing was made incorrectly including VAT: the reverse charge to the customer should have been applied. The customer claimed a tax deduction from the tax stated on the invoice; the tax administrator did not notice the mistake during the tax inspection and therefore incorrectly assessed the entitlement to a tax deduction. Only when carrying out a repeated inspection did the tax administrator refuse the claim. According to the CJEU, claiming a tax deduction was unacceptable in this case. It also commented on when it is possible to carry out a repeated inspection and when it is not. It may be concluded from the CJEU s reasoning that restrictions on repeated inspections in the field of VAT are practically non-existent. The provisions of the Czech Tax Code allow repeated inspections only under certain conditions. It is yet to be seen what role these provisions will play in the matter and whether or not the Czech tax administration will seek to amend these provisions in any way. 6

7 March Tax Liabilities March Monday 3 Income tax The filing of the reconciliation of income tax from dependent activities for the 2013 taxation period Wednesday 12 Excise duty Excise duty for January (except for the spirit excise duty) Tuesday 18 Intrastat The Intrastat statement for February Monday 17 Income tax Quarterly advances are due Submission of report of the paying agent Thursday 20 Income tax Monthly deducted advances for personal income tax from dependent activities and fringe benefits Electronic filling of the reconciliation of income tax from dependent activities for the 2013 taxation period Insurance Submission of a report to the advances on the pension savings for February and maturity of advances on pension savings. Tuesday 25 Excise duty Tax return for February Submission of the tax return to claim a refund of the excise duty on heating oils, green oil, and other technical petrol for February (if the title exists) Value added tax Environmental taxes The tax return and tax for February EC sales lists for February The tax return and tax from gas, solid fuel, and electricity for February Thursday 27 Excise duty Excise duty for January (for the spirit excise duty) Monday 31 Income tax Payment of the tax withheld under a special tax rate for February 7

8 March April Tuesday, 1 Income tax Payment of the tax withheld under a special tax rate for 2013 Filling a tax return and tax payment for 2013 if not audit is required and the tax payer prepares and presents the tax return by himself/herself. Insurance Filing a return and payment of pension savings for 2013 if not audit is required and the tax payer prepares and presents the tax return by himself/herself. Wednesday, 9 Excise duty Excise duty for February (except for the spirit excise duty). Tuesday, 15 Road tax Quarterly advance for the first quarter of Wednesday, 16 Intrastat The Intrastat statement for March. Tuesday, 22 Income tax Monthly deducted advances for personal income tax from dependent activities and fringe benefits. Insurance Submission of a report to the advances on the pension savings for March and maturity of advances on pension savings. Lotteries and other similar games Source: Submission of a report to the deducted advances from the lotteries and other similar games and quarterly advance for the first quarter of. Thursday, 24 Excise duty Excise duty for February (only the spirit excise duty). Friday, 25 Excise duty Tax return for March Value added tax Environmental taxes Tax return to claim a refund of the excise duty on heating oils and other technical petrol for March. Tax return and tax for the first quarter and for March. EC sales lists for the first quarter and for March. Tax return and tax from gas, solid fuel and electricity for March. Wednesday, 30 Income tax Payment for the tax withheld under a special tax rate for March. 8

9 March 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 John Ploem Zbyněk Brtinský Miroslav Svoboda Marek Romancov Peter Wright LaDana Edwards Tomas Seidl Adham Hafoudh Radka Mašková Deloitte Advisory s.r.o. Nile House Karolinská 654/ Prague 8 - Karlín Czech Republic Tel.: Fax: Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, 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 approximately 200,000 professionals are committed to becoming the standard of excellence. Deloitte Czech Republic