The new Civil Code effective from 2014 will also have an impact on tax law, introducing new terms that will have to be incorporated in all tax regulations. Let us have a look at some of the new concepts introduced by the new law.
The most significant changes will be in income taxes. As a result of the abrogation of the Gift Tax, Inheritance Tax and Real Estate Transfer Tax Acts, these taxes will be integrated into income taxes along with the new concept of mutual donation. In terms of terminology in Czech, liabilities will change to debts, lease of a business to leasehold, loan to borrowing, and companies will no longer be termed ‘společnost’ in Czech but ‘obchodní korporace’.
Other changes not directly related to recodification include:
- Exemption of dividends and shares in profit paid between Czech and EU taxpayers, both for individuals and legal entities
- Extension of the period for exemption of income generated by individuals from the sale of securities extended from 6 months to 3 years
- Introduction of an annual threshold of CZK 100,000 for exemption of income from the sale of securities not in a company’s assets, and an increase in the maximum limit for the deduction of gifts up to 15% for individuals and unification to 10% of the tax base for legal entities.
The bill to amend the tax laws in connection with private law recodification has been passed in the second reading in the Chamber of Deputies of the Czech Parliament.
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