One of current goals of the Czech government has been to improve tax collection and to minimise tax avoidance and tax evasion. A number of legislative changes have come into effect during 2017. Some of them have been in the preparatory stages, often tied to time limits for implementing EU law into Czech law. This is also the case of reporting between EU Member States under EU Council Directive 2016/881/EU, so called Country by Country Reporting („CbC“). Currently, it is expected to be effective in the Czech Republic as of October 2017 (although previously it has been planned already as of June 2017).
In fact, the respective amendment of the Act no. 164/2013 Sb., on International Cooperation in Tax Administration, as amended, is currently being debated in the Senate. The General Financial Directorate is expecting this Act to be adopted in Fall 2017.
The duty to submit CbC reports to the local authorities (the Specialized Financial Office in the Czech Republic) will be relevant for groups with consolidated turnover exceeding 750 mil. EUR per annum. The selected entities will submit one-time CbC notification („ohlášení“ in Czech) containing only the contact data and the group structural data. Then, the periodical ex-post CbC report will also contain selected financial indicators. It should be emphasized that the first relevant period is already 2016 and the Act contains the specific regulation of its legal effect and respective deadlines.
We suggest that the entities with turnover in the group exceeding the threshold prepare the data for the CbC Reporting in advance - which is now imminent for 2016 - and be ready to submit the first report with short notice this Fall, after the effective date of the act - even though that date is not absolutely certain at the moment.