Czech Republic: Proposed changes to income tax law | KPMG | GLOBAL

Czech Republic: Proposed changes to income tax law for 2019

Czech Republic: Proposed changes to income tax law

The first draft of an amendment to the income tax law, released by the Ministry of Finance for comments, would implement certain tax law changes expected to be effective in 2019.


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Among the proposals are changes that would affect:

  • Individual (personal) income tax – the concept of a super-gross wage and a solidarity tax increase would be repealed.
  • Deductibility of borrowing costs – amounts of up to CZK 80 billion or 30% of earnings before interest, tax, depreciation and amortisation (EBITDA) would be deductible in a tax period; borrowing costs above these limits would be considered to be non-deductible.
  • Controlled foreign companies (CFC) rules – a Czech entity would have to include in its tax base an amount of certain “selected” income of its CFC, i.e., a company in which the Czech company’s participation is directly or indirectly greater than 50% of capital.
  • Exit tax – effective from 2020, the relocation of assets without a change of ownership would become subject to tax.
  • Hybrid mismatches – effective from 2020, the additional taxation of hybrid mismatches would apply for associated entities.
  • Abuse of right – the “tax procedure code” would be revised to include a general anti-abuse rule, under which the tax administrator would not take into consideration certain actions that have a principal purpose of “tax advantage.”


Read a February 2018 report prepared by the KPMG member firm in the Czech Republic

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