At the end of 2022, the Council of the European Union approved a Directive (EU) on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the EU (the “Directive”).
The aim of the Directive is to introduce a global minimum effective tax rate of 15%. Such tax will apply to the profits of large multinational and domestic groups with annual revenues of at least EUR 750 million (the same threshold as for Country-by-Country Reporting) in the consolidated financial statements in at least two of the four preceding accounting periods.
The obligation to be taxed at this minimum effective rate will apply in every state in which the given company operates.
In response, in May, the Ministry of Finance published a draft of a new law on compensatory taxes in order to transpose this EU Directive.
In practice, there should be two separate direct taxes – the international top-up tax and the domestic top-up tax. Nevertheless, it should be mentioned that formally, they will not present income taxes or similar taxes. According to the submitted information, the Proposal should not contradict the valid double tax treaties that the Czech Republic has concluded with individual countries.
The planned effective date is 31 December 2023 at the latest, which is also the latest deadline by which the Czech Republic is committed to complete this implementation.