The Legal 500

On 1 January 2011 the new Tax Procedure Code took effect which will regulate tax proceedings in the Czech Republic . As tax proceedings concern almost everybody, as almost everybody pays tax, let us look at what the new Tax Procedure Code will bring.

Will a dispute concerning the 5+1 and the 5+0 rules also arise in Slovakia (similarly to the Czech 3+0 versus 3+1 rules)? Is the regulation of the time limit for tax assessment in Slovakia , which is applicable to international tax treaties, discriminatory?

The real estate tax rate doubled on the basis of the amendment to the Real Estate Tax Act that came into force in 2010. Therefore some municipalities took their option and increased the tax rates. The rate increased from CZK 5.00 to CZK 10.00 per square meter of built-up area for structures serving for industry, building industry, transport, energy industry and other agricultural production, and from CZK 0.10 to CZK 0.20 per square meter of land. Arable land, hop gardens, vineyards, gardens, fruit orchards, permanent grasslands, productive forests and fish ponds, and also structures for other business activity make an exception.

In the Czech Republic, a country with a continental legal system, court decisions do not set precedents as they do in common law jurisdictions. Nevertheless, court decisions in tax proceedings may not be ignored, as to a considerable extent they modify the interpretation of legislation.  Without knowledge of court decisions one may not succeed in tax proceedings. Recently, two substantial decisions of the Czech Constitutional Court concerning tax reviews have been published.

On 3 July 2009, President of the Czech Republic signed an amendment to Act No. 586/1992 Sb., on income taxes, as amended (hereinafter referred to as the “ITA”), drawn up by the Ministry of Finance. This amendment has been published in the Collection of Laws under No. 216/2009 Sb. and became effective on 20 July 2009. The law amends the Income Tax Act in the following areas (without limitation): Depreciation of tangible assets, Financial lease-purchase agreements, Education of employees

On 19 December 2008, the President of the Czech Republic signed the Amendment to the Income Taxes Act, among other Acts. This Amendment had been under preparation for a long time, and after long negotiation (the Amendment had already been submitted to the House of Parliament by the government on 24 July 2008) was finally approved on 10 December 2008. The Amendment became effective on 1 January 2009 when it was published in the Collection of Acts of the Czech Republic under No. 2/2009 Coll.

An amendment to the Act on Value Added Tax was published in the Collection of Laws under No. 302/2008 on 19 August 2008. This amendment modifies the Act in more than 300 points. It comes into effect on 1 January 2009. The current regulations are used for application of the tax, as well as rights and responsibilities based on the law for the tax period prior to the effect of the amendment.

Since 1 January 2008 two different thin capitalisation rules have been simultaneously in force in the Czech Republic. The effect of the respective amendments depends on the date of signing the credit or loan agreements in question:

On 21st August 2007, the Chamber of Deputies passed the Public Stabilization Act, which includes, amoung others, an amendment to the Income Tax Act.

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