From 1 January 2021, new rules will start applying to the publishing of financial statements. These include the so-called Special publishing methods pursuant to Section 21b of Act No. 563/1991 Coll., on Accounting (Accounting Act), which will relate exclusively to business corporations. They will now be able to publish their financial statements in the Collection of Deeds in the Commercial Register through their tax administrator.
Business corporations may now publish their financial statements in the Collection of Deeds in the Commercial Register through their tax administrator. The obligation to publish the financial statements will be met at the time of filing with the relevant income tax administrator. This streamlines communication between public administration systems. The two acts so far (filing an income tax return with the tax administrator and sending the financial statements to the registry court) are replaced by one submission.
Who can use the new publishing method?
However, not all reporting entities can use this option – only business corporations can. Furthermore, entities that submit the annual report to the Czech National Bank under a special regulation – and are therefore subject to the special arrangements referred to in Section 21b (1) of the Accounting Act – are also exempt.
Although audited companies are not directly excluded from the range of business corporations, it is virtually impossible for them to meet the publishing obligation using this option. According to Section 21b of the Accounting Act, only financial statements, not annual reports, can be the documents submitted.
However, if the financial statements are to be submitted as part of the annual report pursuant to Section 21a (4) of the Accounting Act, they cannot be published through the tax administrator. This is because these other documents are not needed by the income tax administrator and their processing would therefore go beyond what the tax administrator should require in accordance with the principle enshrined in Section 9 (3) of the Accounting Act. Even if the annual report is actually submitted to the tax administrator, the tax administrator will not be able to submit it to the registry court, unlike the financial statements.
The new regulation thus targets, in particular, micro and small reporting entities that are business corporations and are not obliged to have their financial statements audited. However, they continue to be under the obligation to file the financial statements in the Collection of Deeds by the end of the reporting period following the period for which the financial statements were prepared (e.g. the financial statements prepared for the year ended 31 December 2021 must be published by the end of 2022 at the latest).
Formal requirements for the submission to the tax administrator
The submission must indicate the extent to which the tax administrator is to submit the financial statements to the registry court. The reporting entity shall be responsible for publishing all mandatory disclosures.
The financial statements thus submitted must be filed as an attachment to the income tax return filed electronically and this return must be admissible (i.e. the tax return must not be filed during an assessment or additional assessment proceedings). Submissions to the tax administrator must be in the format and structure specified by the Tax Code and meet the conditions laid down in the Tax Code. Further technical specifications on how to proceed in this area can be expected. Let us wait and see what the practice brings.
If the above conditions are met, the reporting entity has fulfilled its obligation to publish the financial statements at the time it filed an income tax return with its respective tax administrator. The tax administrator must then submit the financial statements to the registry court without undue delay. However, when it does so, no longer affects the timely fulfilment of the entity’s obligations.
Important rules related to the publication of financial statements have already been summarised for you in the article Do not forget to publish your financial statements (in Czech).