Ministerstvo financí publikovalo pracovní verzi daňové revoluce

Ministry of Finance published a working version of the tax revolution

At the end of last week, the first version of the long-awaited draft law amending certain laws in connection with the adoption of the new Accounting Act was published. One of these laws is the Income Tax Act (more details HERE).

The scope of the proposed changes is massive. Combined with the proposed changes in the area of accounting, it is one of the biggest changes to Czech taxation since the establishment of the independent tax system.

After a first cursory study of the proposed changes, below is a brief overview of the top 5 changes we have noted so far (the current general effective date is 1 January 2025, which seems - to put it mildly - a relatively ambitious schedule):

• International Accounting Standards - Taxpayers mandatorily applying International Accounting Standards (IFRS) will generally derive their tax base from profit or loss under those standards. However, adjustments will have to be made to the result for any permanent differences between the (new) Czech standards and IFRS. The proposal also contains a very specific procedure for the transition to/from IFRS or for the first year of application of this approach.
• Revolution in the treatment of assets - There is a complete recodification of the approach to assets and their treatment - among other things, all terminology and approach to leasing, tax depreciation, depreciation groups or depreciation period, technical (or "subsequent") appreciation, related value limits, first year of application of the new rules, etc. are changed.
• Tax valuation allowances and provisions - Tax valuation allowances and provisions will generally be made independently of the accounting.
• Income tax in euros - If the currency of the taxpayer's accounts is the euro, then the calculation and administration of corporate tax is expected to be in euros from 2027.
• Individuals - Individuals currently keeping accounts will be taxpayers with a so-called cash basis (i.e. not accrual basis) as from the effective date of the new regulation. Furthermore, the new approach to asset administration may have a negative impact on certain groups of taxpayers.

We promise that this will not be the last time we write about this topic.

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

Authors:

Karel Hronek

Tereza Pospíšilová

Hana Cicvárková