Announcement of income coming abroad
From the moment the tax package comes into effect in 2019, taxpayers who pay income derived from sources in the Czech Republic to a non-resident taxable person from which the tax is levied by deduction at a special tax rate, even if such income tax is exempt or is not subject to taxation in the Czech Republic under an international treaty, will be obliged to report this to the tax administrator.
This extends the existing notification obligation under Section 38d (3) of the Income Tax Act, where the tax deduction is actually incurred.
This new disclosure obligation introduces an obligation to notify exempt payment of profits or licence fees, for example. But it will also apply to the announcement of the payment of interest abroad, which is often not subject to tax in the Czech Republic under international treaties.
The is due not only to the acquisition and subsequent use of other relevant data for mandatory automatic exchange of information according to the legal regulations binding on the Czech Republic, but also the relatively high outflow of income from foreign direct investment. The tax administrator also needs to map profit flows outside the Czech Republic to better combat tax evasion.
Taxpayers who fail to submit the notification by the deadline have not fulfilled a non-monetary obligation and can face a fine of up to CZK 500,000.
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