The discussion on the amendment to the Top-Up Taxes Act (Pillar II), which was supposed to undergo its second reading at the April session of the Chamber of Deputies, has been postponed. This increases the risk that it won't be approved in time, which for some taxpayers of this tax would mean only one thing - they would have to fulfill the obligations arising from Pillar II already this year. What exactly should these entities be prepared for?
In the Chamber of Deputies of the Czech Republic, on February 13, 2025, the first reading of Parliamentary Document No. 783 took place, amending Act No. 416/2023 Coll on Top-Up Taxes For Large Multinational Groups And Large Domestic Groups (the “Top-Up Taxes Act”). Although the second reading of the amendment to the Top-Up Taxes Act was planned for the 136th session of the Chamber of Deputies, which was scheduled from April 15, 2025, to April 25, 2025, the amendment was ultimately removed from the agenda of this session. According to current information, it is expected that the discussion of the amendment will be moved to May 2025. It is still unclear whether the amendment to the Top-Up Taxes Act will be approved during the current term of the Chamber of Deputies. Given this uncertainty, taxpayers of the Czech top-up tax should be prepared for the possibility that they will have to fulfill administrative duties related to Pillar II already in the year 2025 (within 10 months after the end of the reporting period).
The gradual postponement of the discussion on the amendment to the Top-Up Taxes Act significantly increases the risk that the legislation will not be approved on time. In such a case, some taxpayers of the Czech top-up tax may face administrative obligations (i.e., submitting tax return and information return on the Czech top-up tax) already during the year 2025, despite often not having enough information available, such as a final Country by Country report, which is the main document for calculating transitional safe harbors based on information contained in the Country by Country report.
We will continue to monitor the approval process of the proposed amendment on your behalf. Additionally, we are keeping an eye on any actions taken by the tax administrator regarding the potential release of guidance and templates for submitting tax returns and the information returns on the Czech top-up tax.
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