In Brief from International Taxation [January 2021]

Reports on exchange of financial account information and guidance on the transfer pricing implication of the COVID-19 pandemic were published by the OECD. ECOFIN expressed their support for the implementation of DAC 7. Divided distribution by Gibraltar companies to eligible Luxembourg entities will be subject to dividend withholding tax as of 1 January 2021. The French Supreme Administrative Court ruled on the interpretation of tax treaties and PE concept. New PE rules were introduced also in Denmark. Other interesting news refers also to tax changes in Portugal, Belgium or US. 

26. 1. 2021

Recommendations of the OECD for Transfer Pricing in Relation to the Impacts of the COVID-19 Pandemic

Extraordinary economic conditions brought about by the COVID-19 pandemic and consequent responses of governments in individual countries may bring numerous practical difficulties in applying the arm’s length principle. For this reason, the Organisation for Economic Co-operation and Development (the “OECD”) issued a report on 18 December 2020 containing recommendations for taxpayers and financial administrations how to proceed when applying transfer pricing rules in periods affected by the COVID-19 pandemic. 

26. 1. 2021

Higher Interest on Withheld Excess VAT Deduction Can Be Claimed Retrospectively

It has been several months since landmark ruling of the Supreme Administrative Court ref. no. 1 Afs 445/2019-47 which confirmed the entitlement of VAT payers to a 14% interest on excess deduction plus the Czech National Bank’s repo rate instead of only 1% plus the Czech National Bank’s repo rate. What effect has this change had on the administrative practice of the Financial Administration? And is it possible to require a higher interest also in closed cases? 

25. 1. 2021

Tax package: changes in tax depreciation / amortisation charges from 1 January 2021

The tax package, or, more precisely, Act No. 609/2020 Coll., was published in the Collection of Laws of the Czech Republic on 31 December 2020, coming into effect on 1 January 2021. In December 2020, its effectiveness was affected by a dispute whether or not President actually vetoed the Act by refusing to sign it, and, as a result, the opposition is considering lodging a constitutional complaint with the Constitutional Court. Whatever the result of this political debate, if we proceed from the effective date of 1 January 2021, the tax news of 2021 already have to be taken into consideration because it is a very current topic, especially in the area of tax depreciation / amortisation charges, which can be utilised retrospectively from 1 January 2020 under specific conditions in line with the transitional provisions. As part of the fight against the coronavirus crisis, the tax package brought three changes in the area of tax depreciation / amortisation, which we will cover in this article. 

22. 1. 2021

Do you watch the limits for aid provided under the COVID or Antivirus programmes?

In recent months, the Czech government has introduced a number of state aid programmes to help businesses hit by the Covid-19 pandemic overcome the period of limited economic activity. In general, the aid provided under individual programmes may be used simultaneously and cumulated. However, in some cases it is not allowed to exceed the maximum aid limit for a single undertaking. What programmes are subject to the limit and what should be included in the calculation? A what exactly does “a single undertaking” mean? 

22. 1. 2021

Brexit from the perspective of immigration

On 31 January 2020, the United Kingdom of Great Britain and Northern Ireland (the UK) left the European Union under the terms of the so-called Withdrawal Agreement, which entered into force on 1 February 2020. It states that UK citizens currently residing in the Czech Republic will retain, under meeting certain conditions, their rights in the field of residence, access to the labour market and social security until the end of their lives. 

21. 1. 2021