Poslanecká sněmovna schválila návrh zákona o EET 2.0

The draft will now proceed to the Senate and will subsequently need to be signed by the President. It includes a number of significant changes in the areas of income tax, employee benefits and VAT, the most important of which we summarise below.

Changes in the area of income taxes

• Special “EET OFF” regime for the smallest entrepreneurs: taxpayers meeting the stipulated conditions, in particular participation in the first band of the flat-rate tax regime and annual income of up to CZK 1 million, may opt out of the electronic sales records system in exchange for an increased flat-rate tax.
• One-off tax credit for self-employed individuals: the draft introduces a tax credit of up to CZK 5,000 for taxpayers with income from self-employment, calculated as the positive difference between 15% of the partial tax base from self-employment and the basic taxpayer credit.
• Return of the kindergarten allowance and student tax credit: the draft restores the possibility to claim the kindergarten allowance, up to the amount of the minimum wage, and the student tax credit of CZK 4,020 per year.
• Employee benefits: the cap on the exemption of non-monetary leisure benefits should be abolished, except for recreation and tours, where an annual limit of CZK 20,000 will apply. The current limit for health benefits should remain in place; however, the draft also supplements the annex defining selected employer-provided benefits in the area of employee healthcare that should be excluded from the subject of income tax. Newly, non-monetary contributions provided by an employer to an employee or their family member for selected social services should also be exempt.
• Exemption of voluntary tips: voluntary tips in gastronomy should be exempt from income tax and social security/health insurance contributions, up to 7% of sales.
• Increase in thresholds for the obligation to file a tax return: the income threshold triggering the obligation to file a tax return should increase from CZK 50,000 to CZK 100,000. For employees, the threshold for other income should similarly increase from CZK 20,000 to CZK 40,000.
• Advertising and promotional items: the possibility to treat advertising and promotional items with a value of up to CZK 500 excluding VAT as tax-deductible expenses will be restored also in the case of still wine.

Changes in the area of VAT

• Reduced VAT rate for non-alcoholic beverages in catering services: non-alcoholic beverages served as part of catering services should newly be subject to the 12% VAT rate, aligning them with the rate applicable to catering services.
• Abolition of the VAT deduction limit for selected passenger cars: the draft abolishes the restriction on claiming VAT deductions when acquiring selected passenger cars. From 2027, full VAT deduction could therefore once again be available also for vehicles for which the entitlement to deduction is currently capped at CZK 420,000.
• Deadline for returning VAT deductions on unpaid liabilities: customers who have claimed a VAT deduction on unpaid liabilities should be required to return the deduction once payment is more than three months overdue, instead of the current six months.
• Bad debts: the threshold for adjusting the tax base for small bad debts should increase from CZK 10,000 to CZK 20,000, the aggregate threshold in relation to a single debtor should increase from CZK 20,000 to CZK 100,000, and the overdue period should be shortened from six to three months. It should newly be possible to adjust the tax base for bad debts also in a tax period other than only the last tax period of the calendar year.

Authors:

Ivana Krylová

Romana Klímová