The amendment to tax legislation, which is effective from 1 April 2019, introduces a new reporting duty for tax payers. Income that is generally subject to withholding tax in the Czech Republic but is exempt or not subject to taxation in the Czech Republic based on the applicable double taxation treaty will need to be reported to the tax authority.
Payments that exceed CZK 100,000 and that are exempt or not subject to taxation by withholding tax (e.g. dividends, interest, licence fees) will be reported on a monthly basis. If such income is paid off during April 2019, the first report should be filed as early as in May 2019. The Ministry of Finance has already released the relevant form on the financial administration’s website. It is also possible to apply for an exemption from the reporting duty with the tax authority for up to 5 years. The application should be submitted to the relevant tax office; however, it has not been specified what reasons will be considered by the tax administrator to be relevant for the exemption of the tax payer from the reporting duty.
We recommend analysing whether your company pays off any income that is subject to the reporting duty and consider taking additional steps in this regard, if relevant.