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Amendment to the Income Tax and VAT Act approved by MPs

We have already informed you about the upcoming changes to the Income Tax Act and the VAT Act. Now the amendment to these acts has been approved by the Chamber of Deputies under the Chamber of Deputies' print 254 and is going to the Senate.

The amendment to the VAT Act mainly increases the turnover for mandatory VAT registration and changes the calculation of the deadline for filing a control report. For more information, see our earlier article HERE.

Extraordinary depreciation originally applicable only to assets acquired by 31 December 2021 will also be applicable to assets acquired by 31 December 2023. For more information on the basic parameters of extraordinary depreciation, please see HERE.

The flat tax will undergo certain changes, which we reported on in an earlier article HERE. In particular, the introduction of different flat tax bands with different monthly levies. In the course of the negotiations in the Chamber of Deputies, only an amendment concerning the legislative clarification of the related laws (in particular, laws concerning insurance premiums) was adopted.

It is also worth mentioning the relatively significant increase in the income threshold that obliges an individual to file a tax return, from the current CZK 15,000 to CZK 50,000 per year. For employees who typically (if the statutory conditions are met) benefit from the annual tax settlement carried out by their employer, the limit of other income triggering the obligation to file a tax return will also increase from the current CZK 6,000 to CZK 20,000 per year.

The changes are proposed to take effect from 1 January 2023 with a number of transitional provisions. We will continue to monitor the approval process.

If you have any questions, please contact the authors of this article or the EY tax team with whom you regularly work.

Authors:

Jevgenija Bajzíková

Hana Cicvárková

Adam Linek