Sleva na dani u zastavených exekucí

Tax relief for terminated execution

As of 1 January 2022, an amendment to the Income Tax Act came into force, introducing a new tax relief on the title of terminated execution:

• For debts that have been enforced for at least 3 years;
• The claimed debt does not exceed CZK 1,500 without accessories;
• In the last three years before the effective date of the amendment (i.e. since 1 January 2019), the claim has not been even partially recovered.

The maximum possible amount of the relief for one execution is - according to the Execution Code - CZK 450 (30% of CZK 1,500). The relief can be applied by corporations or individuals in the tax return, but also through an annual tax settlement. The entitlement to the discount should be evidenced by an official resolution on the execution.

The amendment to Section 35(4) of the ITA was introduced by the Act No. 286/2021 Coll., which amended, inter alia, the Code of Civil Procedure or the Code of Execution. This amendment is generally aimed at alleviating debt traps of citizens with small debts and thus allows to terminate small value executions. The tax relief is then a form of compensation to creditors.

The tax relief can only be claimed for the tax period in which the executor awarded the amount of compensation, it cannot be carried forward to other periods. If the taxpayer does not incur a tax liability, the tax relief cannot be utilized.

For further information on this topic, please contact the authors of this article or other members of the EY team with whom you work.

Authors:

Tereza Pospíšilová

Jana Semrádová