New delay of tax liabilities only applies to businesses whose activities have been directly restricted
With regard to the current situation, the Ministry of Finance has issued another blanket “Decision on the waiver of tax, tax accessories and tax prepayments due to an extraordinary event”.
For selected entities, the first part of the measure includes the following:
- Waiver of interest on late payments related to the late payment of VAT for September, October and November 2020 (or the 3rd quarter);
- Waiver of road tax prepayments; and
- Waiver of income tax prepayments (both for individuals and legal entities) due in the period from 15 October 2020 to 15 December 2020.
However, the tax entity must inform the tax administrator (via e-mail, for example, should be sufficient) of their intention to benefit from the tax relief. We would like to point out that the waiver of prepayments does not mean a waiver of the tax itself, nor does it mean that the deadlines for submitting tax statements (including any related sanctions) are postponed to a later date.
In addition, the measure is only intended for business and non-business entities with a specifically defined field of income (where more than half of their income originates from prohibited or restricted activities as stipulated by the Resolution of the Government of the Czech Republic on the Adoption of a Crisis Measure of 12 October 2020).
Specifically, this concerns the following fields:
- Running restaurants and bars;
- Running music and dance clubs, game clubs and other similar clubs and discos;
- Organising concerts and other music, theatre or film performances;
- Organising wedding/registered partnership celebrations and funeral receptions;
- Running circuses and variety shows;
- Organising pilgrimages and similar traditional activities;
- Organising congresses and other education-related events;
- Organising trade fairs;
- Running indoor sports facilities, gyms and fitness centres, indoor/outdoor swimming pools, wellness facilities;
- Running zoos; and
- Running museums, galleries, exhibition spaces, castles, chateaux and other similar historical or cultural objects, astronomical observatories and planetariums.
The second part of the measure allows taxpayers a waiver of VAT on free-of-charge deliveries of basic protective equipment and on free-of-charge deliveries of goods or the provision of services to selected entities (specifically stipulated in the Decision) that are obliged to submit their tax returns in the period from October to December 2020.
With respect to the limited number of entities that are entitled to use the above-mentioned tax reliefs, we would also like to draw attention to other possibilities that may help to effectively address the current problems:
- Making use of the newly-introduced possibility of a retrospective claim for tax losses;
- Lowering the prepayments made for tax liabilities, including the possibility of their complete cancellation, even retrospectively;
- Postponing the deadline for submitting the income tax return under certain conditions;
- Postponing the due date for tax payments or setting up a payment schedule – “tax deferral” (with a positive impact on the reduction of interest – from 14% plus repo to 7% plus repo, which, in addition, may be waived);
- The current health insurance and social security arrangement also offers certain possibilities;
- Possibilities of waivers based on the current instruction: extraordinary reasons may often lead to reductions on any sanctions that could arise (including waivers beyond the framework of the instruction).
We, therefore, recommend seeking the most suitable solution for each specific situation (including the possible use of subsidies or wage compensations, e.g. as part of the Antivirus programme).