Deadlines for submitting information returns

The positive news is that the deadline for submitting information returns on top-up taxes and the deadline for submitting top-up tax returns will be no sooner than 30 June 2026, i.e. not in 2025 as required by the current wording of the Top-Up Taxes Act.

In line with the planned amendment, we can summarise that a Czech top-up tax taxpayer (or another person acting on its behalf) will file the following returns for each taxable or reporting period:

• The information return on the allocated top-up tax should be filed by the taxpayer as before, i.e. within 15 months after the end of the taxable period and within 18 months in the initial period of a group. The initial period of a group is the first of the reporting periods in which the group is considered a large multinational or a large domestic group.
  • If the information return on the allocated top-up tax containing required information is filed by the ultimate parent entity or another designated filing entity from a state with which the Czech Republic has concluded an agreement on an automatic exchange of information and the Czech taxpayer reports this fact to the tax administrator within the period for filing the respective information return, the taxpayer’s obligation is considered fulfilled.
• The information return on the Czech top-up tax is newly proposed to be filed within 15 months after the end of the taxable period and within 18 months in the initial period of a group (the effective Top-Up Taxes Act sets a deadline of 10 months after the end of the taxable period).
  • Taxpayers of the Czech top-up tax will also have the opportunity to fulfil the obligation of filing their information return on the Czech top-up tax by filing an information return on the allocated top-up tax provided that the information return on the allocated top-up tax meets all the requirements set by the Top-Up Taxes Act. This fact is to be reported to the tax administrator within the deadline for filing the information return on the Czech top-up tax.
  • The obligation to file an information return on the Czech top-up tax is also considered to be fulfilled if the information return is filed by another Czech top-up tax taxpayer who is a member entity of the same group and informs the tax administrator accordingly within the deadline for filing the respective information return.

Deadlines for filing tax returns

For Czech taxpayers, the following rules apply or are expected to apply:

• A tax return on the allocated top-up tax is to be filed within 22 months after the end of the taxable period; and
• A tax return on the Czech top-up tax is newly proposed to be filed within 22 months after the end of the taxable period (prior to the proposed amendment, the deadline was within 10 months after the end of the taxable period; thus, the amendment aligns the deadlines).

It still applies that if the taxpayer fails to file a tax return on the allocated or Czech top-up tax within the given period, the declared tax is considered to be equal to CZK 0, and any following tax return filed is considered additional. In other words, no fine is applied for any late tax declaration.

The top-up tax is to be paid to the Specialised Tax Office within the deadline for filing the respective tax return.

Accounting aspects of top-up taxes

Although the deadline for filing a top-up tax return and other information for 2024 is likely to be extended to 2026, a reporting entity is still obliged to recognise the top-up tax on an accrual basis. This means that if the reporting entity is a top-up taxpayer, it is obliged to determine for the 2024 financial statements whether and possibly in what amount the entity will pay the top-up tax in the future. Given that the calculation will probably not be final, the expenditure on the top-up tax for 2024 will probably be reported in the balance sheet as a reserve for income tax, even though tax legislation does not consider top-up tax to be an income tax (as opposed to the accounting perspective). We further draw your attention to the fact that a reporting entity is obliged to disclose in the notes to the financial statements whether it is a top-up tax taxpayer or not, to provide information that the top-up tax is not included in the calculation of deferred tax, and to individually quantify the top-up tax expense that is reported as part of income tax expense in the profit and loss statement (even though the tax is not considered an income tax under the Top-Up Taxes Act). Audited reporting entities will have to justify to the auditor their estimate of the top-up tax expense for 2024 or their judgement that the expense will be nil. That means that it will be necessary to provide the auditor with sufficient and appropriate documentation; in this context, we assume that cooperation with the parent entity will be crucial.

We therefore conclude that, even though the amendment to the Top-Up Taxes Act proposes to postpone the obligation to file a tax return until June 2026, taxpayers will already have to deal with top-up taxes in the current period.

Parliamentary Document no. 783 is available online on the website of the Chamber of Deputies.