The start of the new year in the Czech Republic has brought with it significant changes to the tax lanscape, impacting both large corporations and small medium-sized enterprises (SMEs). The process for submitting Value Added Tax (VAT) returns has been revised for companies operationg across EU member states. Addictionally, the Czech Republic has introduced Global Tax, in line with mandates from the EU and OECD, following in the footsteps of countries like Singapore and Spain.
VAT changes
The recent VAT reforms have notably affected SMEs based in the Czech Republic but headquartered in other EU countries, particularly those whose primary revenue is generated in the Czech Republic. Companies with a turnover of less than SEK 2 million ($102,860) will not be subject to VAT registration in other EU states. However, if their turnover exceeds this threshold in a single year, they will automatically be required to comply with the VAT system starting January 1 of the following year.
The Global Tax in Czech Republic
The Czech Republic’s Government has aligned its national legislation with European requirements concerning tax evasion in EU and OECD member states. Therefore, national institutions have applied a 15% compensatory tax for multinational corporations with significant activity in the country. The implementation of this new tax impacts on societies whose consolidated revenues have exceeded SEK 18 billion ($ 771,450,000) in two of the last four years. This value is based on the results achieved in two of the last four years.
In this case, the Czech Ministry of Industry and Trade estimates that the newly introduced tax will raise $42,160,300. Approximately 17 large multinationals will be obliged to pay this tax. This measure will also affect over 4,000 private companies that are linked to them. It is predicted that technology giants and banks will be the biggest contributors to this compensatory tax.
If you wish to comply with your tax obligations in the Czech Republic, do not hesitate to rely on Auxadi for the management of these tax processes.
Can Auxadi help?
Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.
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All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.