Czech Republic’s Ministry of Finance released a draft amendment to introduce a top-up tax, aligning with the EU directive on global minimum tax that took effect on 31 December 2023.
The amendment to the top-up tax act seeks to clarify specific concepts and align the legislation with the model rules outlined in OECD regulations.
If enacted, the amendment will take effect for tax periods beginning on or after 31 December 2023.
The key changes are as follows:
- The tax return deadline for allocated and Czech top-up tax will be unified to 22 months after the reporting period ends (e.g., 31 October 2026, for 2024). Information returns are due 15 months after the period ends, with an 18-month allowance for the first time period. The deadline for filing information returns for the first time period is 30 June 2026 for the year 2024;
- A new option for fulfilling the Czech top-up tax information obligation will be enacted. This allows filing an information return on the allocated top-up tax, provided it includes essential details and the taxpayer informs the tax administrator;
- To ensure the Czech top-up tax complies with safe harbour rules, its scope will extend to joint ventures, affiliates, stateless entities taxable in the Czech Republic, and tax-transparent entities founded under Czech law without residency in other countries;
- The definition of a tax credit and the rules for currency conversion will be clarified.
