In Financial Newsletter No. 4/2020, the Minister of Finance’s decision to waive the tax penalties and administrative fees due to an extraordinary event and the new D-44 Instruction of the General Financial Directorate to waive default interest, interest on a deferred amount and penalties for failure to submit a control statement were published. The media proclamation of business-friendly measures has thus taken its official form. What are the most important ones?
Tax entities which are not subject to a statutory audit or on whose behalf the tax return is not submitted by a tax advisor will most appreciate the fact that the fine for late tax statements and default interest is waived, provided that the tax return is filed or, more precisely, the tax is paid, no later than on 1 July 2020.
This means that those who planned to file the tax return before 1 April 2020 do not have to hurry to seek a tax advisor to postpone the tax payment. The deadlines for refunding tax overpayments will, of course, not be affected by the Minister of Finance’s decision.
If the taxpayer fails to meet the deadline, he/she loses the right to the waiver and the relevant penalty will be assessed to him/her in full. Therefore, taxpayers wishing to take advantage of this option should bear in mind that the day of payment is considered to be the day on which the tax is credited to the tax administrator’s account. In this case, the normal tolerance of five working days will not apply. The waivers are independent of each other; therefore, a failure to pay the tax does not extinguish the right to a have the fine for the late tax statement waived.
Another helpful step is the waiver of fines for failure to submit a control statement in due time, which the taxpayer submitted before he/she was asked to do so by the tax administrator. This fine is set by law at CZK 1,000 and is not imposed in the case of the first violation in a calendar year. The waiver is limited to the period from 1 March 2020 to 31 July 2020.
For the remainder of the calendar year, taxpayers should be aware that the waiver of the fine for the first late submission of a control statement may also fall within the period when the fines are waived. Similarly, excessive delay in submitting a control statement cannot be recommended. As soon as the request for its submission is received, the fine cannot be waived pursuant to the decision of the Minister of Finance.
Instruction D-44 adds extraordinary measures related to the spread of coronavirus to the relevant guidelines as a justified reason for waiving default interest, interest on a deferred amount and fines for failure to submit a control statement. If the taxpayer proves in a sufficiently credible manner that his/her delay is due to the application of extraordinary measures, the interest or fine will be waived in full. The Instruction is limited to the period from 1 March 2020 to 31 July 2020 in relation to the waivers of fines for failure to submit a control statement.
In particular, VAT payers who, due to the closure of their establishments, will not have sufficient funds to pay the tax could benefit from the D-44 Instruction.
These measures are certainly welcome. However, the main source of financial burden for the self-employed is the payment of social security and health insurance contributions. The Minister of Labour and Social Affairs has already announced that she is considering limiting these levies as well. We will see how the situation will continue to evolve. According to information issued by the Czech Chamber of Commerce on 19 March 2020, the issue of insurance premium relief is not yet being resolved on a centralised basis. Premium payers must always submit individual applications for changes in premium payments, applications for payment of premiums and penalties in instalments and, in the case of health insurance premiums, also applications for waiver of penalties – the details can be found on the websites of the Czech Social Security Administration and the particular health insurance companies.
The last and less favourable news. The introduction of the “third wave” of the Electronic Sales Records system cannot be postponed according to the information of the Ministry of Finance, but the Ministry will allegedly proceed in this respect “leniently”.
Financial Newsletter No. 4/2020
8th September 2020
19th August 2020
20th August 2020
27th November 2020