On 27 October 2015, the Government submitted the Chamber of Deputies with Parliamentary Bulletin No. 639, a bill amending Statutory Measure of the Senate No. 340/2013 Coll. on real estate acquisition tax.
The bill’s primary aim is to clearly define the person who is the payer of real estate acquisition tax. This should be achieved by making the taxpayer and the acquirer of the real estate one and the same person without admitting other agreements between the parties.
Another aim of the new legislation is to resolve ambiguities in determining the nature of underground utilities for the purposes of defining the subject of taxation, i.e. to determine whether they constitute movables or real estate. Pursuant to the bill, only the acquisition of title to a building that is a part of underground utilities or of a co-ownership share of such building, for a consideration under the Cadastre Act should be subject to real estate acquisition tax. This building or co- ownership share will then be considered a movable thing for the purposes of real estate acquisition tax.
A major proposed change is the expansion of the category of cases of real estate acquisition not subject to real estate acquisition tax. In contrast to the previous legislation, which tax exempted title acquisition in connection with the transformation of a business corporation, acquisition of title in connection with the transformation of any legal entity, i.e. even those that are not subject to Act No. 90/2012 Coll. on business corporations and cooperatives (the Business Corporations Act), will now be exempt, too. The rationale for the proposed change is equal treatment of all legal entities for the purposes of real estate acquisition tax. On the other hand, the transfer of assets to a partner as a result of a business corporation transformation will no longer be exempt from real estate acquisition tax.
The bill further envisages expanding the list of persons exempt from real estate acquisition tax to include, without exception, all regional and local authorities, as well as voluntary associations. This change is a response, inter alia, to practice based on prior legislation, where real estate acquisition by local and regional authorities only gave rise to non-financial transfers of funds between individual public budget sections. The bill should thus reduce the administrative workload and ease the burden on regional and local authority budgets.
The legislation governing the determination of an agreed price in the case of an exchange of real estate should also undergo major changes. In this instance, the value of forfeited real estate will not be taken into account for the purposes of agreeing on a price on condition that title acquisition is subject to real estate acquisition tax and the agreed price does not comprise the acquisition value alone. This provision is designed primarily for cases in which one contractual party provides the second party with a supplementary payment in an exchange; in this case, the agreed price will be equal to the total of such monetary performance.
The proposed effective date is 1 April 2016.