Zmena definice cisteho obratu a dopad na lhutu pro danove priznani

Change in the definition of net turnover and impact on the tax return deadline

The amendment to the Accounting Act adopted as part of the so-called consolidation package brought, among other things, a change in the definition of "net turnover".

Whereas before the amendment net turnover was defined as revenues (after deduction of the sales discounts), now net turnover will only include revenues from the sale of goods and services.

The aim of the change is that net turnover should include only those revenues on which the business model of the entity is based. In determining those revenues, account is taken in particular of the industry and market in which the entity operates and the substance of the entity's activities for its customers.

In particular, depending on the business model, accounts in account groups 64 and 66 may get excluded. Thus, it may easily happen that, without changing the entity's operations, its net turnover gets reduced due to a change in definition.

The amount of net turnover is one of the factors determining the category (size) of the accounting unit. The category in turn affects the unit’s obligation to have its financial statements audited.

Large and medium-sized entities are subject to mandatory audit, whereas for small entities the obligation to be audited depends on whether the entity exceeds the classification criteria for mandatory audit (in two consecutive periods), one of which is a net turnover of over CZK 80 million.

Thus, for example, if a small accounting unit has historically achieved high exchange rate gains, under the new definition its annual net turnover may fall below CZK 80 million and its financial statements will not be subject to mandatory audit (unless this obligation is retained because it meets other criteria for mandatory audit).

The deadline for filing the corporate income tax return for companies subject to statutory audit is generally six months after the end of their tax year. In a situation where the entity is not subject to a statutory audit, the standard deadline is three months.

The change in the definition of net turnover, which may exclude some entities from the obligation to have their accounts audited, may also have an impact on the deadline for filing the corporate income tax return for the 2024 tax year.

Therefore, it may be recommended that, with the end of the tax year starting after 1 January 2024, entities should check whether there will be a change in the obligation to audit their financial statements and therefore a change in the deadline for filing their corporate income tax return.

The topic of statutory audit will be of great interest in the years to come.  The new Accounting Act, scheduled to come into force on 1 January 2025, is likely to bring further changes to both the criteria for the size of accounting units and the criteria for statutory audit.

Finally, we would like to add that the above brief commentary cannot replace a detailed tax assessment of a specific situation. If you have any questions, please contact the authors of this article or the EY tax team with whom you regularly work.

Authors:

Ladislava Zamazalová

Zuzana Mikulová