Český pohled na bezpečné přístavy se nám jeví poněkud nebezpečný

The Czech view of safe harbours seems somewhat dangerous to us

Last week, the Senate approved the draft Czech implementation of the Pillar 2 GloBE rules - i.e., the bill on top-up taxes for large groups.

This week brings us another interesting development in this area. At a meeting with the professional community, representatives of the tax administration reportedly expressed the view that the transitional safe harbour rule based on information contained in the country-by-country report (CbCR) will only apply for the purposes of the Inclusion Inclusion Rule (IIR) and not for the purposes of the domestic top-up tax (QDMTT).

Our initial impression is that this approach would defeat the purpose of introducing a CbCR safe harbour, i.e. to use simplified indicators to identify low-risk jurisdictions that will be allowed to relieve themselves of the massive administrative burden associated with the full roll-out of GloBE calculations for a transitional period.

Thus, at this point in time, there are two options:

• The interpretation will be further sharpened and the simplification in question will be applied for QDMTT purposes.
• Or no, the simplification will not effectively take place and the full GloBE calculation will have to be considered for the Czech Republic.

So we shall see.

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

Authors:

Karel Hronek

Libor Frýzek