• Service: Tax, Global Indirect Tax, Global Mobility Services, International Tax
  • Type: Regulatory update
  • Date: 12/12/2013

Czech Republic - Regional aid rules affecting corporate tax liability 

December 12: An important fact that may indirectly affect the tax liability of Czech corporations is the end of the current seven-year (2007-2013) period for receiving regional aid through EU programs and the beginning of a new one, which will be associated with new rules in this area beginning 2014.

The new rules reflect a decrease in the basic rate of regional aid for large enterprises from 40% to 25%, as well as stricter requirements in terms of time and technical parameters when filing applications for investment incentives.

Since the effectiveness of these new rules has been postponed to 1 July 2014, opportunities still remain for those considering investments to extend production capacity, primarily in the form of acquiring new machinery in the next three years and in the minimum amount of CZK 100 million (or CZK 50 million in selected regions) (approximately US $3.5 million and US $1.8 million, respectively).

Until the end of January and the beginning of February 2014, it is still possible to file applications for investment incentives under the current regime, which is more favorable for large enterprises, so that they can be approved before 1 July 2014.

Read a December 2013 report prepared by the KPMG member firm in the Czech Republic: Financial Update (December 2013)

Also included in the KPMG report are discussions of the following topics:

  • Chamber of Deputies approved the statutory measures of the Senate amending the tax legislation effective from 1 January 2014
  • Information of the General Financial Directorate on the application of VAT on real estate from 2014
  • VAT returns to be filed only electronically from January 2014
  • Information by the General Financial Directorate on unrealised foreign exchange differences with respect to the case law of the Supreme Administrative Court
  • Changes in social security regarding employees on secondment in the Czech Republic
  • Conform to the new corporate law
  • European Commission proposes an amendment to the directive on the taxation of parent companies and their subsidiaries
  • Case law of the Supreme Administrative Court relating to the solar panel levy
  • Duty to submit filings to financial administration authorities only electronically effective from 1 January 2014

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