This year’s tax gifts
The year’s last editorial before Christmas always leads to the usual “what have they given us again”, what else can we expect in the New Year, and culminates with the obligatory wish that we all carry on in good health.
Of course, we’ll survive. We always do. Plus, this year’s going to be a boring one. So, I’m lighting the first advent candle and opening a (second) bottle, and let’s dive in!
Just a few small items are currently in the legislative process, primarily trying to fix what Santa Claus didn’t catch last year – benefits and stock plans. But it was a toy that kept us all entertained for a whole year (though some of us didn’t want to play anymore) and didn’t immediately end up in a corner on Boxing Day, which was awesome. That’s a must have. Then the VAT amendment, but without the traditional adrenaline rush of resetting all the systems to the new rates on New Year’s Eve.
And let’s not forget that this year we still have a number of beautiful gifts from previous years tucked under the tree. For example, the abolition of the unlimited exemption for sales of securities and shares from 1 January 2025. And then lots of gifts without a spark of surprise in children’s eyes, but in the spirit of “oh, Mommy, look, I got a nice sweater”. They’re kind of like those prearranged, pre-rehearsed adult gifts. For example, the carbon tariff (CBAM), deforestation (EUDR), the top-up tax (Pillar 2) and related reporting. We know about them and can finally start using them. So don’t forget them!
It seems that Santa Claus was busier abroad this year, and that’s why he gave us a bit of a break. He gave a lot of presents to our neighbours in Slovakia. Financial transaction tax, increase in income tax rate for large corporations, increase in VAT rates, sectoral taxes, higher insurance premiums. Then the Slovaks will also have to pay a tax on sugar (or sweetened drinks) from the new year. And higher taxation on tobacco products. A. C. Pigou, the pioneer of the taxation of negative externalities, is also surely rejoicing at this gift.
Even less joy was brought by the UK gifts, especially in the form of a further extension of the already high inheritance tax, this time targeting agricultural land. Following the example of the Czech Republic, in November British farmers also went to the centre of the British capital to protest, of course with the necessary equipment. The UK has not been slow to collect existing taxes efficiently and consistently. Harry Potter (or rather his shadow taxpayer Rupert Grint) has to pay £1.8 million in back taxes after losing a battle with the HMRC (he has already lost £1 million in a case in another period). He and his tax and legal representatives waved their magic wands as hard as they could, but it was no use. The tax authorities insisted on taxing his income at a marginal rate of 52%, even though it was formally generated by a company of which he was a 100% shareholder. This capital income would only be subject to a 10% tax. The Czech tax system does not recognize the concept of corporate vs. personal income in the case of corporations operating only through a 100% shareholder. So far. This gift will also arrive in due course.
The very wealthy (today nicely referred to as “ultra-high-net-worth individuals”) will also live to see it. G20 leaders promised them a proper fair tax in Rio de Janeiro at the end of November. Meanwhile, robots and AI are on the chopping block, because it’s obviously a bigger nut for tax theorists to tax it all fairly (but they’ve only been working on it since 2017, so let’s give them time). And we more down-to-earth “?-net-worth individuals” are still looking for the promised gift of the recodification of Czech accounting and related tax regulations. I think we’ll be able to look forward to a few more Christmases.
If you wanted to add something to your wish list for Santa Claus, know that this year the communication will be two-way. The General Financial Directorate has launched the so-called Tax Echo (nudge letters), which is a personalised letter sent to taxpayers when a discrepancy in their tax liability is identified based on available data. Innovative, inspired by modern behavioural approaches. So take a good look under the tree to see if there’s a letter left lying around that might be a bigger nuisance.
To all our readers (over 5,500 of you – thank you very much for that!), we wish you, as always “Happy Holidays!”
PS: If you're struggling to choose a gift for your similarly tax-law-and-accounting-impaired loved ones, give them the option of regularly subscribing to our newsletter HERE (let’s have at least twice as many of us here next year 😊).