Last week, another tax relief package called Tax Relief Package III, implemented by a decision of the Minister of Finance, was published in the Financial Bulletin. This package follows up on preceding packages and introduces or extends general measures intended to help improve the cash flows of taxpayers and provide additional space for the fulfilment of their tax obligations.
For all taxpayers liable to income tax, except for large taxpayers falling under the Specialized Tax Authority (i.e. companies with an annual turnover above CZK 2 billion and financial institutions), the relief package extends the period within which they can file their 2019 income tax return and pay the tax due resulting from the tax return after the expiry of the statutory deadline, but still without any penalties. The deadline for filing the 2019 income tax return and settling any tax due was extended until 18 August 2020. This general measure applies to both individuals and legal entities, i.e. those whose statutory deadline for filing the tax return expired on 1 April 2020 as well as those whose statutory deadline will expire on 1 July 2020.
The same relief, i.e. the penalty-free period until 18 August 2020, also newly applies to the 2018 supplementary tax returns that have to be filed by individual entrepreneurs who changed the method of claiming expenses (e.g. switch to lump-sum expenses) in 2019, and to tax-exempt income reports (where tax-exempt income above CZK 5 million is concerned).
However, the relief only applies to taxpayers whose taxation period is a calendar year. Taxpayers which have a fiscal year or which file a tax return for a different period (extended period due to the switch to a fiscal year or due to a transformation, a tax return for a part of the taxation period if the company enters into liquidation, etc.) are not automatically entitled to the relief. They may apply with the tax authority for an extension of the deadline, provided that their deadline for filing the tax return has not yet expired. The same also applies to the said large taxpayers falling under the Specialized Tax Authority.
Real property acquisition tax
As regards real property transfers carried out (entered into the Land Register) in the period from December 2019 to August 2020, the buyers are allowed to defer the payment of the tax and the filing of the tax return until the end of this year. A draft of the complete cancellation of this tax with retroactive effect has already been undergoing the legislative process. This additional deferral is to avoid situations when the taxpayers to which the tax cancellation will apply have to file the tax return and pay the tax and afterwards apply for the refund of the tax.
Default interest for late tax payments
The decision of the minister on the general waiver of the default interest and the interest on deferred amounts accrued from 12 March 2020 to the end of this year applies to taxes with respect to which the tax administrator allowed a tax deferral or division into instalments, upon application, justified by the impacts of the spreading of the coronavirus. This measure brings significant administrative relief to both taxpayers and tax authorities, because the vast majority of taxpayers that are allowed to defer the tax payment due to the coronavirus spreading also meet the conditions for a full waiver of default interest on late payment.
As part of this tax relief package, the period of waiver of value added tax on the free supplies of selected items of basic medical materials and raw materials for the manufacture of disinfectants and medical equipment used in the prevention of the COVID epidemic and in the related medical treatment is extended until 31 July 2020.
Until the end of this year, all taxpayers are granted a waiver of administrative fees associated with filing applications for tax payment deferral, applications for the waiver of certain fines for the failure to file VAT control statements and applications for the waiver of default interest for late payment and interest on a deferred amount. Until the end of this year, no fees will be charged for filing applications for the confirmation of the absence of tax debts or of the personal account balance.
Finally, the minister also granted a general waiver of fines for late filing to those employers which failed to file the annual reconciliation of payroll tax advances for their employees for 2019 by the statutory deadline but fulfilled this obligation by the end of May 2020.
Jana Pytelková Svobodová
Head of Tax
ASB Czech Republic