• Service: Tax, Global Indirect Tax, International Tax
  • Type: Regulatory update
  • Date: 3/19/2014

Czech Republic - Tax legislation anticipated; expenses relating to royalties 

March 19:  The Ministry of Finance’s legislative plan is expected to be made available for public comments in March or April 2014. According to discussions with the Ministry, it appears that most of the changes would relate to the regulation of certain concepts introduced by the new Civil Code (especially trusts and the superficiary right to construct) and to the mandatory implementation of value added tax (VAT) directives.

Read a March 2014 report prepared by the KPMG member firm in the Czech Republic: Financial Update (March 2014)

This KPMG report also discusses a decision of the Supreme Administrative Court on the deductibility of expenses relating to additional royalties billed by a Dutch parent company.

As demonstrated by this decision, the principle generally applied during tax proceedings is that the taxpayer has the burden of proof. There are a few exceptions to this principle, for example, in cases in which the tax authority intends to adjust the tax base as a result of the determination of arm’s length prices between related parties. In such cases, it is the tax authority that has the burden of proof when demonstrating the difference between prices.

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