In connection with the current and entirely unprecedented situation, the Ministry of Finance has issued the “Ruling to Pardon Tax Accessories and the Administrative Fee due to Exceptional Events” (hereinafter to be referred to as “the Ruling of the Minister of Finance”). At the same time, we can read on the pages of the Ministry of Finance that “taxpayers can expect an accommodating approach on the parts of the Financial and Customs Administration”. Let us hope that it will not remain only at this step and that we can expect further extension of the measure by which the state will help entrepreneurs swiftly and specifically.
We have prepared for you several answers to questions which have currently been appearing in the areas of taxes, accounting and finance. In the following days we will, in view of the development of the situation, prepare an update and continuation of this special newsletter and we hope that you will find the information useful.
We are fully aware of the economic losses many of our clients are going to suffer in connection with the coronavirus pandemic. Therefore, in the event of interest, we will until the end of April 2020 provide all clients consultancy services in connection with minimizing losses connected with the coronavirus pandemic for a reduced unitary hourly rate of 80 EUR / CZK 2, 000.
1. On Monday we paid advance payment on income tax. Can we request a refund of this payment from the Ministry of Finance?
Yes. The tax administrator can decide not only on reducing the advance amount, but also on cancelling the obligation to pay the deposit both in the future and retrospectively. The basic criterion when deciding on reduction of advance or the cancellation thereof should be the determination of advance payments at such amounts that would cover the expected total tax. Reduction of economic performance, which can be expected in many sectors at this time, is a relevant reason for permitting cancellation or reduction of deposits. In view of the fact that the advance paid on 15. 3. 2020 is the advance for the tax obligation for 2020 (not 2019), we have to prove that we do not expect a tax obligation for 2020 or, more precisely, we expect it to be significantly lower. If the tax administrator decides also to excuse (cancel) the obligation to pay an already paid advance, it is possible to request a refund of this payment by means of a request to refund the overpaid amount.
2. We are a company with the term for filing a tax return on 1. 4. 2020. Can we postpone the filing term to 1. 7. 2020 without a request?
Yes. In accordance with the Ruling of the Minister of Finance it is not necessary to request postponement of the term individually. The submission term has not been changed, although by the Ruling of the Minister of Finance, all penalties will be pardoned if the return is filed and the tax paid by 1. 7. 2020. Please note, however, that the tax (money) has to be on the tax administrator’s account by 1. 7. 2020.
3. I am an individual (not company), with the term for filing a tax return on 1. 4. 2020. An overpaid amount arises for me from filing the return. Can I file the return on 1. 4. 2020?
Yes. The legal term for filing the tax return has not changed (only penalties connected with late filing of the return are pardoned), it is in your case suitable to file the return on the term. Do not forget to enter into the return data on the bank account where the overpayment should be refunded and to sign it. The overpayment should be refunded within the standard deadline of 30 days.
4. We are a company and we have a business year which ended in September 2019. We have a legal term for filing the tax return on 1. 4. 2020. Can we also postpone the filing term to 1. 7. 2020.
No. The Ruling of the Minister of Finance expressly pardons penalties for late filing of tax returns which have a legal three-month deadline after the end of the tax period. When filing the tax return, you proceed according to the regulations which prolong the three-month deadline to a six-month deadline. In view of the fact that the Ruling of the Minister of Finance does not refer to your situation (i.e. business year), we believe that this relief has no impact on you.
5. The term for filing VAT tax returns for February is approaching. Is it possible to file the return and control statement later?
The terms for filing VAT and CS remain without change, although penalties for late filing will be pardoned. If the CS is filed after the deadline, then the fine (at the amount of CZK 1,000) for not filing the CS will automatically be pardoned without formal notice by the financial authority if the obligation to pay it arose for the period from 1. 3. to 31. 7. 2020.
Pardon of fines for late filing of CS (CZK 10,000, 30,000 or 50,000) has to be requested individually. Proving connection with coronavirus will probably not be a problem at this time.
The late filing fine will automatically be pardoned if deferral is permitted or, as the case may be, if payment of tax in instalments is permitted, or penalty interest will be at least partially pardoned.
6. The term for filing VAT tax returns for February is approaching. We are able to file the return but we cannot afford to pay the tax obligation. How should we proceed?
For this reason you can request deferral of tax payment or paying tax by instalments. The Financial Authority should decide on such a request within 30 days after it is filed. If deferral or payment in instalments is not requested or the Financial Authority does not permit it and you pay VAT late, you can request pardon of interest. All requests (for deferral, instalments or pardoning penalty interest) are free of charges if they are filed by 31. 7. 2020. In order for any of these requests to be successful, it is necessary to prove connection with coronavirus.
7. We are the owners of a shopping centre and we have lease agreements closed with individual store owners according to which we invoice rent monthly. In view of the present situation we expect that the lessees will not be able to pay their rent on the agreed terms. What are the possibilities of postponing the due date of the VAT which we are to pay from these rentals?
We believe that one of the possibilities below come into consideration:
- Continue according to unchanged lease agreements and, in the event of expected drop of incomes, file an individual request for deferral of payment or payment of VAT in instalments.
- By a supplement to the lease agreement one can agree on a change of the business terms as regards rent, i.e. reduction of rent, a rent-free period. A discount provided before realization of the taxable supply reduces the tax base, a discount provided after the date of taxable supply is a reason to issue a corrective invoice for reduction of the tax base and tax.
- By a supplement to the lease agreement, it would in some cases be possible also to negotiate a change of the arranged lot: changing, for instance, monthly rent to quarterly/biannually, which would postpone the due date of the rent and the obligation to declare tax. However, if the supply is provided over a period of more than 12 months, the taxable supply is considered realized on the last calendar day of the year by the latest.
8. We are the owners of a large shopping centre and we are preparing for EES due to the sale of gift vouchers as of 1. 5. 2020. Is it true that this term will be postponed?
According to the press release by the Ministry of Finance there is no planned legislative postponement of the date. However, a three-month tolerance period has been declared which will concern all entrepreneurs falling into this phase of electronic registration of sales effective as of 1st May. According to the press release, the “Financial and Customs authority will be maximally tolerant to possible findings. It will fulfil an exclusively advisory role and will not impose any penalties if a newly-registering entrepreneur has not managed to prepare for registration obligations on time” during this period.
9. What is the obligation of the government for damages, according to the Crisis Act, and how can the claim be exercised?
Although this is a legal issue, we will try to answer at least in outline. According to the Crisis Act, the government is obliged to cover damages caused to legal entities and natural persons in causal links with the crisis measures taken in keeping with to this act. The government can be absolved of this responsibility only if it is proved that the aggrieved party caused the damage themselves. However, it is unclear how this will be treated in this case.
10. We have agreed with the TPA auditors and tax advisors on the term of the audit and tax verification of accounting and we have expected that, as in the past, work will proceed at our company. In what manner will the auditors and tax advisors proceed?
We aim to conduct audits and tax verifications within the agreed terms if it is possible. For the protection of our clients and our workers, we are providing audits and tax verifications remotely. We will notify you in advance as to the documentation we will require for this work and most communication will take place via telephone or via email and video conference. We have prepared a repository for data exchange, to which you will receive access and through which data can safely be shared.
Should you need a change of term due to personnel complications caused by coronavirus, please contact us as soon as possible and we will try to find an alternative date.