Tax package in effect from 1 January 2021
Even though President Miloš Zeman refused to sign the amendment to the Income Taxes Act for 2021 (Parliamentary Document No. 910), the amendment was published in the Collection of Laws under 609/2020 Coll. and came into effect on 1 January 2021. However, the effectiveness of the Act could be affected by the dispute whether President actually vetoed the Act by refusing to sign it, which could potentially lead to a constitutional complaint being lodged with the Constitutional Court.
The amendment to the Income Taxes Act came into effect on 1 January 2021, which makes its applicability and the interpretation of transitional provisions simpler. However, this means that all taxpayers who are individuals will be subject to the new taxation system from 2021 without having a choice (in case the Act did not come into effect on 1 January 2021, it was proposed in the transitional provisions that individuals could choose between the existing and the new taxation systems). As a result, it will be necessary to deal with the following in January 2021:
Setup of tax depreciation charges
- increase in the threshold amount for the recognition of tangible assets from the existing CZK 40 thousand to CZK 80 thousand (with the possibility of retrospective utilisation already from 1 January 2020);
- abolishing of special tax depreciation charges for intangible assets (with the possibility of retrospective utilisation already from 1 January 2020);
- introduction of extraordinary depreciation charges for the 1st and 2nd depreciation group (with the possibility of retrospective utilisation already from 1 January 2020).
Changes to the personal income tax and employee benefits
- abolishing of the super-gross salary and introduction of progressive taxation rates of 15% and 23% for individuals;
- tax advantage on monetary meal allowance;
- change in the personal tax allowance to CZK 27,840 for 2021 and CZK 30,840 for 2022;
- removal of the the cap for the child tax bonus.
- simpler notification of income paid to Czech non-residents under Section 38da of the Income Taxes Act;
- non-monetary gifts provided in relation to the SARS-CoV-2 outbreak will be considered a tax deductible expense if provided between 1 March 2020 and 31 December 2020;
- changes in the taxation of bonds, etc.
We will be happy to discuss with you all the aspects of the amendment to the Income Taxes Act for 2021 and its potential effects on 2020 and we are looking forward to our cooperation.
Parliamentary Document 910 is available on the website of the Chamber of Deputies.