On 16 August 2023, the Government of the Czech Republic approved the new bill of the Top-up Taxes Act to ensure a minimum level of taxation of large-scale multinational and domestic groups. This is the transposition of Council Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union that reflects the Organisation for Economic Cooperation and Development (OECD) base erosion and profit shifting (BEPS) project model rules of December 2021 entitled the “Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two)”.
In connection with the submission of the bill, it is proposed that the Chamber of Deputies of the Parliament of the Czech Republic approves this bill at the first reading so that it can enter into force no later than 31 December 2023, which is the transposition deadline.
We remind that the new legal regulation will apply to taxpayers who are the part of a large-scale domestic or multinational group with annual revenues at least EUR 750 million. These groups are obliged to ensure that they pay tax at a minimum level equivalent to an effective rate of 15% in each country in which they have corporations, permanent establishments, etc.
In addition to a top-up tax, the Czech Top-up Taxes Act also introduces a Czech (domestic) top-up tax. The current wording of the bill is available on the following website ODok.