Ucetni vyhlasky a Pilir 2

Accounting and Pillar 2

Draft amendments to the Accounting Ordinances have just been published (more details HERE). The proposed changes relate mainly to two areas - aspects related to the expected possibility to keep accounts in a currency other than the Czech currency and aspects related to the expected introduction of the Pillar 2 rules (implemented in the Czech Republic by the not yet approved law on top-up taxes for large multinational groups and large domestic groups). In this Alert, we will focus on the latter area.

Specifically, the proposal states (among other things) that an entity that accounts for deferred tax and that is  a payer of top-up tax (or expects to become in the immediately following financial year) shall disclose the following in the notes to the financial statements:

• an information that the entity is a payer of top-up tax (or expects to become in the immediately succeeding financial year),
• an information that the top-up tax has not been taken into account in the calculation of deferred tax,
• the portion of current tax expense attributable to the top-up tax; and
• a description and quantification of the expected effects of the top-up tax on the entity.

The transitional provision in this regard states that this provision shall apply to financial statements prepared from the date of entry into effect of this Decree (i.e. from 1 January 2024).

The above should also apply to financial statements prepared after 1 January 2024 for accounting periods beginning before 1 January 2024. According to the current draft Decree, the information should therefore also be included in financial statements for the calendar year 2023 or even for the financial year ending during 2023 for which financial statements are prepared after 1 January 2024.

If you are interested in this area, please contact the authors of this article or the EY advisory team with whom you usually work.

Authors:

Karel Hronek

Hana Cicvárková