Tax 

What has changed from 2 August 2021 for foreigners with a long-term residence in the Czech Republic?

After two years, there has been another amendment to Act No. 326/1999 Coll., on the Residence of Foreign Nationals in the Czech Republic and amending certain laws with related regulations. Let us briefly summarise what the main changes include and whom they concern.

1. ID cards exchange – goodbye paper documents

There is an obligation for family members of EU citizens to exchange existing documents for new, biometric ones. Attention: the validity of all non-biometric documents expires on 3 August 2023. We thus recommend making the change rather sooner than later! The exchange of existing documents for new biometric ones is free of charge. A new biometric card will also fit better in your purse or wallet…

2. EU citizens

If an EU citizen decides to apply for a certificate of temporary residence, this certificate is now called a registration certificate. This is issued by an administrative body for a standard period of 10 years and the format of the document does not change either, i.e. it will keep the form of an A6 folding book without biometric data. Newly, this act is subject to an administrative fee of CZK 200.

3. Charges for some applications

An administrative fee of CZK 200 has also been newly introduced for family members of EU citizens and for applications for the issue of a permanent residence permit for an EU citizen. Do not forget that all administrative fees can only be paid in the form of stamps. Unfortunately, we will have to wait for payment terminals a few more years.

4. Brexit

Citizens of Great Britain who resided in the Czech Republic before Brexit and have a temporary or permanent residence here have to exchange their “folding book” for a biometric document by 31 August 2022. The same exchange has to be made by their family members.

5. Comprehensive health insurance

Foreigners not included in the public health insurance system (or subject to another exception) are obliged to take out travel health insurance within the scope of comprehensive health care within 90 days after entering the Czech Republic. It will be possible to take out the insurance only at the PVZP insurance company; this rule therefore eliminates the need to compare prices and the scope of insurance coverage between individual insurance companies. Travel health insurance taken out before 2 August 2021 will remain valid in the future.

6. New-borns in the public health insurance system 

A child born to a foreign-mother with a long-term residence will also newly be included among insured persons of the public health insurance. However, the baby will only stay in the system until the end of the calendar month in which the baby reaches 60 days of age. For example, if a new member of the family is due on 20 September 2021, the baby will stay in the public health insurance system until 30 November 2021. Do not forget to report the baby to the relevant health insurance company within 8 days after birth and also pay the insurance for the new-born. Subsequently, the baby will get comprehensive health insurance.

7. A close and distant family member of an EU citizen

The Act on the Residence of Foreign Nationals now distinguishes between close and distant family members. Distant family members include unmarried couples (spouse), persons for whom serious health reasons urgently require personal care of the respective EU citizen, etc. We recommend that these distant family members exchange their ID document even sooner. If they do not make the change by 31 August 2022, the status of close family members will not remain.

8. Change of some requirements for submitting an application

In addition to the introduction of administrative fees, the requirements for distant family members have also changed. They now have to prove their income and comprehensive health insurance.

The Act on the Residence of Foreign Nationals, together with the Tax Code, belong to one of the most complex legal regulations. The language barrier, red tape, long waiting periods, constantly changing conditions for arriving in the Czech Republic, all this confuses many foreigners. Do not be afraid to entrust your problems to our experts!

Immigration Employment of Foreigners Brexit dReport newsletter
Tax 

Information of the General Financial Directorate on transfer pricing in financial transactions

On 9 August 2021, the General Financial Directorate issued information on the guidance on transfer pricing in financial transactions (the “Information”) in which the General Financial Directorate refers to Transfer Pricing Guidance on Financial Transactions (the “Guidance”) published by the Organisation for Economic Cooperation and Development (the “OECD”) in February 2020. Together with the Information, the General Financial Directorate published an unofficial translation of the Guidance into Czech. 

20. 10. 2021
Tax 

Reintroduction of exemption of non-residents’ interest income from so-called Eurobonds

On 30 September 2021, an amendment to the Banking Act was published in the Collection of Laws, which was altered during the legislative process to also include an amendment to the Income Tax Act. This amendment reintroduces the exemption of non-residents’ interest income from so-called Eurobonds, i.e. bonds issued abroad by taxpayers with registered seat in the Czech Republic effective from 1 January 2022. 

20. 10. 2021
Tax 

OECD: Implementation plan of a two-pillar solution

The OECD kept its promise and issued a Statement on 8 October 2021 involving a draft implementation plan of the two-pillar solution to address the tax challenges arising from the digitalisation and globalisation of the economy. An information brochure including answers to frequently asked questions was issued along with the Statement. The global convention was subsequently endorsed by the G20 representatives during their summit. 

20. 10. 2021